WORKS  MANAGEMENT  LIBRARY 

MODERN 
ORGANIZATION 

AN  EXPOSITION  OF  THE 
UNIT  SYSTEM 

BY 

CHARLES  DELANO  HINE 


NEW  YORK 

THE  ENGINEERING  MAGAZINE  CO. 
1912 


Copyright,  1912,  by 
THE  ENGINEERING  MAGAZINE  Co. 


MODEEN   ORGANIZATION 


INTRODUCTION 

The  chapters  assembled  in  this  volume  appeared 
originally  in  The  Engineering  Magazine  as  a  series 
of  articles  which  ran  from  January  to  July,  1912. 
They  were  prepared  by  Major  Hine  by  invitation 
of  the  Editors  of  the  Magaztne7'ta1f  a  comprehensive 
definition  of  his  philosophy  of  management,,  ample 
enough  in  space  and  scope  to  permit  a  complete  un- 
folding of  his  doctrine  and  practice. 

That  philosophy,  as  expressed  in  the  unit  system 
of  organization  directed  toward  promoting  efficiency 
in  operation  in  one  of  the  great  engineering  in- 
dustries, has  been  applied  on  a  scale  of  magnitude 
approached  perhaps  by  but  one  other  example  in 
recent  experience.  Its  success  was  declared  with 
conviction  in  specially  informed  circles  ;  but  out- 
side of  a  rather  closely  specialized  audience,  the 
characteristics  of  Major  Hine's  work  had  not  been 
effectively  presented  until  these  articles  appeared. 
The  ideas  embodied  are  so  fundamental,  and  so 
certain  to  exercise  a  lasting  influence  upon  the 
ideals  and  form  of  industrial  organization,  at  least 
in  certain  fields,  that  there  is  patent  demand  for 
the  assembly  of  the  several  parts  in  a  single  com- 
plete group  and  their  perpetuation  in  the  more 
permanent  form  of  a  bound  volume. 

The  policies  advocated  are  most  interesting,  be- 
cause they  depend  so  little  upon  mechanisms  of  any 
kind,  so  little  upon  systems  affecting  rank  and  file 
or  the  equipment  and  materiel,,  and  so  much  upon 

5 


253718 


6  INTRODUCTION 

psychological    influences    operating   first   upon   and 
then  through  the  directing  official. 

They  are  policies  largely  of  mental  suggestion; 
and  mental  suggestion  must  be  the  final  power,  the 
ultimate  effective  appeal,  in  any  successful  philoso- 
phy of  management,  whether  the  institutions 
through  which  that  management  works  be  tradi- 
tional, systematic,  or  scientific.  For  mental  sugges- 
tion creates  and  transforms  the  ideals  which  are  the 
first  principle  of  efficiency,  and  on  mental  sugges- 
tion depends  the  attitude  of  the  workers  toward  any 
institutions  and  policies  the  management  may 
provide. 

CHARLES  BUXTON  GOING. 

July,  1912. 


CONTENTS 

CHAPTER    I.    THE    UNIT    SYSIKM    ON    THE    HABEIMAN 
LINES 

Organization  Closely  Related  to  Sociology — 
Industrial  Organization  Affected  by  Traditions 
of  Feudalism — Evolution  of  Organization  Simi- 
lar to  the  Evolution  of  Government — Organiza- 
tion Teaches  the  Art  of  Directing  Working 
Forces  to  the  Most  Desirable  Total  Effect — A 
Striking  Concrete  Example  of  Modern  Organ- 
ization— The  Harriman  Lines — The  Inaugura- 
tion of  the  Unit  System — A  Working  Outline  of 
That  System — The  Official  Circulars  by  Which 
It  Was  Promulgated — Where  It  Is  in  Successful 
Operation — Official  Positions  and  Duties  under 
the  Unit  System 13 

CHAPTER  II.    OPERATION  OF  THE  UNIT  SYSTEM 

A  Distinctive  Characteristic  of  the  Railway- 
How  the  Extent  of  a  Railway  Affects  Its  Man- 
agement— Management  of  Headquarters  in  the 
Absence  of  the  Chief— Evils  of  the  Chief-Clerk 
System — How  the  Unit  System  Eliminates  Gov- 
ernment by  Chief  Clerks — Practical  Objections 
to  the  Chief-Clerk  System,  and  Gains  from  Its 
Elimination — Relations  of  the  Co-ordinate  Offi- 
cials under  the  Unit  System — The  Consolidated 
File  a  Popular  Feature  of  the  Unit  System — 
The  Chief  of  Staff  in  Place  of  Chief  Clerk 25 

CHAPTER  III.    BROADENING  THE  IDEALS  OF  LINE  SUPER- 
VISION 

The  Unit  System  out  on  the  Road — Depart- 
mental Jealousies  under  the  Old  System — 

7 


8  CONTENTS 

Broadening  Effect  of  Making  All  Division  Offi- 
cers Assistant  Superintendents — No  Conflict  of 
Authority  Arises  from  Uniformity  of  Titles — 
Wider  Vision  of  Responsibility  Follows  the  Re- 
moval of  Departmental  Prejudice — The  Human 
Touch — Industrial  Operation  Has  Created  a 
New  Profession 37 

CHAPTER  IV.    OVEB- SPECIALIZATION 

Specialization  Leads  to  Evasion  of  Responsi- 
bility— The  Problem  of  Developing  the  All- 
Round  Man  under  Modern  Conditions — Rota- 
tion between  Departments  as  a  Remedy — The 
Cadet  System  and  Its  Limitations — Our  Prob- 
lem Is  Return  to  a  Balanced  Specialization — 
The  Specialist  Likely  to  Exaggerate  His  Spe- 
cialty— Specialization  Produces  Centralization 
— Centralization  Leads  to  Bureaucratic  Admin- 
istration— Evils  of  the  Bureau  System  and 
Chief-Clerk  System  47 

CHAPTER  V.    FALLACIES  OF  ACCOUNTING 

Accounts  Are  but  a  Yard  Stick — A  Yard  Stick 
Gains  No  Value  by  Repeated  Use — Book  Bal- 
ances and  Statistical  Reports  often  a  False 
Measure  of  Efficiency — Need  of  Co-operation  be- 
tween the  Director  of  Affairs  and  the  Account- 
ant— Accounts  Should  Be  under  the  Direction 
of  Division  Operating  Officers,  not  Remotely 
Centralized — The  Distinction  between  Account- 
ing and  Auditing — The  Accountant  Is  a  Regis- 
trar; The  Auditor  Is  an  Inspector — Need  That 
Engineers  Should  Learn  Accounting — Over- 
estimate of  Accounting  often  Places  the  Highly 
Paid  Operating  Officer  under  the  Criticism  of  a 
Junior  Clerk — Desirability  that  the  Inspector 
Should  Seek  His  Data  on  the  Ground — Fallacy 
of  Considering  Money  the  Equivalent  of  Per- 
formance    59 

CHAPTER  VI.     SUPPLIES  AND  PURCHASES 

Purchasing  often  Exemplifies  Exaggerated 
Specialization — A  Strongly  Individualized  Pur- 
chasing Agent  May  Hamper  other  Departments 


CONTENTS  9 

— Purchasing  Separated  from  other  Duties  on 
Account  of  the  Volume  of  the  Work,  rather 
than  Its  Peculiarity — Centralized  Control  of  De- 
centralized Activity  Exemplified  by  the  Pur- 
chasing Bureaus  of  the  Harriman  Lines — The 
Organization  Elastic  enough  to  Permit  Dis- 
criminating Thought  by  Responsible  Officers — 
Contrast  with  the  Rigidity  of  the  Santa  Fe 
System — How  the  Purchasing  Office  Becomes 
Unwieldy — Requisitions  a  Necessary  Evil — 
How  the  Evil  Can  Be  Minimized — Advantages 
to  the  Railway  from  Identification  with  a  Local 
Representative — The  Sociological  Element  Rec- 
ognized as  the  Most  Important  Feature  of  Mod- 
ern Administration — Fallacy  of  the  Self-Per- 
petuating Organization — The  True  Function  of 
the  Specialist  Is  to  Instruct  Others — Advantages 
of  Amalgamation  Illustrated  by  the  Navy 73 

CHAPTER  VII.    LINE  AND  STAFF 

Executive  Officers  Often  Ignorant  of  Line  and 
Staff  Principles— Origin  and  Definition  of  Line 
Functions — How  Staff  Originated — Examples 
from  the  History  of  Navigation — Original  Func- 
tions of  the  Staff  Officer — Gradual  Development 
and  Deterioration  of  the  Idea — The  Most  Vital 
Staff  Function  Is  Inspection  or  Review — The 
Line  Officer's  Impatience  of  Staff — Best  Anti- 
dote for  the  Trouble — Chief-of-Staff  Idea  the 
Greatest  Boon  to  Modern  Organization 87 

CHAPTER  VIII.    GENESIS   AND  REVELATION  OF  ORGANIZA- 
TION 

Organization  Is  a  Necessity — Its  Type  Often 
Accidental — Evolution  of  Organization  from  the 
Family  Type  through  the  Clan,  the  Tribe,  the 
Government — How  Government  Organization 
Differs  from  Corporate — Efficiency  of  Modern 
Corporations  Much  Decreased  by  Snap  Judg- 
ment of  Financiers — The  Economic  Loss  and 
Sociological  Unrest  thus  Produced — Character- 
istics of  the  Coming  Captain  of  Industry — Un- 
fortunate Unwillingness  of  Men  to  Profit  by 
Experiences  of  Others — Modern  Undertakings 


10  CONTENTS 

too  Large  to  Be  Concentrated  under  One  Man — • 
The  Chief-of-Staff  Idea  as  a  Solution — The 
Quantitative  Limit  to  the  Size  of  Industrial 
Undertakings— De-centralization  of  Detailed 
Activity  with  Centralized  Control  the  Hopeful 
Principle  in  Modern  Organization 101 


THE   UNIT    SYSTEM   ON   THE 
HABEIMAN   LINES 


MODERN    ORGANIZATION 


CHAPTER  I 

THE   UNIT   SYSTEM   ON   THE   HAKKIMAN 
LINES 

/^RGANIZATION  has  been  termed  a 
^^  smaller  sister  of  sociology,  the  science 
of  human  nature.  Industrial  organization, 
including  that  of  transportation  and  com- 
merce, reflects  and  typifies  in  a  greater  or 
less  degree  the  sociological  development  of  a 
people. 

Society  for  centuries  has  been  emerging 
from  political  feudalism  and  despotism.  The 
emergence  from  industrial  feudalism  and 
despotism  is  coming  apace.  The  first  work- 
ing conception  of  the  corporation  was  that 
of  government.  In  the  Middle  Ages  govern- 
ments were  such  close  corporations  that  the 
common  people  as  shareholders  had  little 
13 


14  MODERN  ORGANIZATION 

voice  in  the  management.  Progressive  grants 
of  liberty  have  made  their  proxies  more  ef- 
fective. Since  history  repeats  itself,  the 
modern  industrial  corporation  is  passing 
through  stages  of  development  similar  to 
those  which  have  characterized  the  evolution 
of  the  greatest  of  corporations — govern- 
ments. 

Corporations,  like  most  individuals,  ac- 
quire money  or  its  equivalent  by  the  econom- 
ical expenditure  of  money  or  effort.  It  is 
always  easier  to  expend  than  to  acquire.  The 
problem,  therefore,  is  so  to  limit  expenditure 
that  a  satisfactory  margin  of  acquisition 
may  be  preserved.  This  requires  the  most 
effective  team  work  on  the  part  of  the  indi- 
viduals who  compose  the  officers  and  em- 
ployees of  the  corporation.  Organization  as 
a  science  teaches  the  art  of  so  uniting  and 
directing  these  working  forces  as  to  produce 
the  most  desirable  composite  effect. 

An  interesting  concrete  example  of  mod- 
ern scientific  organization  is  furnished  by 
the  most  extensive  railway  system  in  the 
world,  the  Union  Pacific  System-Southern 
Pacific  Company,  popularly  known  as  the 
Harriman  Lines.  These  lines  comprise  about 
J.8,000  miles  of  railway  extending  from. 


THE  UNIT   SYSTEM  15 

Omaha,  Kansas  City,  and  New  Orleans  on 
the  east  to  Seattle,  Portland,  San  Francisco, 
Los  Angeles  and  Mazatlan,  Mexico,  on  the 
Pacific  coast.  The  gross  annual  earnings 
aggregate  about  $225,000,000.  The  pay  rolls 
carry  from  80,000  to  100,000  employees.  The 
operating  activities  of  this  vast  system,  in- 
cluding maintenance  and  new  construction, 
have  been  controlled  since  1904  by  Mr.  Julius 
Kruttschnitt  with  the  somewhat  awkward 
title  of  Director  of  Maintenance  and  Opera- 
tion, awkward  and  really  misleading  because 
it  is  difficult  to  conceive  of  continued  success- 
ful operation  without  satisfactory  mainte- 
nance. The  headquarters  of  Mr.  Krutt- 
schnitt, who  is  known  as  the  von  Moltke  of 
transportation,  have  lately  been  removed 
from  Chicago  to  New  York  in  order  that  he 
may  be  in  closer  touch  with  his  fellow  mem- 
bers of  the  various  boards  of  directors  of 
the  constituent  corporate  properties. 

As  a  result  of  studies  and  recommenda- 
tions made  by  the  writer  in  1908  under  the 
direction  of  Mr.  Kruttschnitt,  there  has  been 
progressively  inaugurated  during  the  last 
three  years  a  unit  system  of  operating  or- 
ganization. The  working  outline  of  this  or- 
ganization can  best  be  understood  from  the 


16  MODERN   ORGANIZATION 

following  standard  forms  of  official  circulars 
by  which  it  is  promulgated : 

Kail Company 

OFFICE  OF  GENERAL  MANAGER 


Circular   No. 


191... 

The  following  appointments  of  Assistant  General 
Managers  are  announced,  effective 

,  191...: 

1.  Mr 2.  Mr 3.  Mr 

4.  Mr. 5.  Mr 6.  Mr 

7.  Mr 8.  Mr 

Each  of  the  above  named  officials  continues 
charged  with  the  responsibilities  heretofore  devolv- 
ing upon  him  and  in  addition  assumes  such  other 
duties  as  may  from  time  to  time  be  assigned. 

The  titles,  "General  Superintendent/'  "Superin- 
tendent of  Motive  Power/'  "Chief  Engineer/'  "Su- 
perintendent of  Transportation/'  "General  Store- 
keeper/' "Superintendent  of  Telegraph"  and  "Su- 
perintendent of  Dining  Cars/'  will  be  retained  by 
the  present  holders  or  their  successors  to  such  ex- 
tent only  as  may  be  necessary  for  a  proper  com- 
pliance with  laws  and  existing  contracts. 

All  persons  under  the  jurisdiction  of  this  office 
will  address  reports  and  communications,  including 
replies,  intended  for  the  General  Manager  or  for 
any  Assistant  General  Manager,  simply:  "Assistant 
General  Manager"  (Company  telegrams  "A.  G.  M."), 
no  name  being  used  unless  intended  as  personal  or 


THE   UNIT    SYSTEM  17 

confidential,  or  to  reach  an  official  away  from  his 
headquarters. 

It  is  intended  that  an  Assistant  General  Manager 
shall  be  in  charge  of  this  office  during  office  hours. 
Each  official  transacts  business  in  his  own  name 
and  no  person  should  sign  the  name  or  initials  of 
another. 

All  persons  outside  the  jurisdiction  of  this  office 
are  requested  to  address  communications,  including 
replies,  intended  for  the  General  Manager  or  for  any 
Assistant  General  Manager,  simply:  "General  Man- 
ager  Co Bldg. 

,"  no  name  being  used  un- 
less intended  as  personal  or  confidential  or  to  reach 
an  official  away  from  his  headquarters. 


General  Manager. 
Approved : 


Vice-President. 
, .  Division 


OFFICE  OF  SUPERINTENDENT 

Circular  No 

191... 

Effective  this  date,  this  Division  discontinues 
among  its  officials  the  use  of  the  titles,  Master  Me- 
chanic, Division  Engineer,  Trainmaster,  Traveling 
Engineer  and  Chief  Dispatcher. 


18  MODERN  ORGANIZATION 

The  following  named  officials  are  designated: 

1.  Mr.   A.   B Assistant  Superintendent 

2.  Mr.    C.   D Assistant  Superintendent 

3.  Mr.    E.   F Assistant  Superintendent 

4.  Mr.   G.   H Assistant  Superintendent 

5.  Mr.    I.    K Assistant  Superintendent 

6.  Mr.  L.  M Assistant  Superintendent 

They  will  be  obeyed  and  respected  accordingly. 
Each    of    the    above    named    officials    continues 

charged  with  the  responsibilities  heretofore  devolv- 
ing upon  him,  and  in  addition  assumes  such  other 
duties  as  may  from  time  to  time  be  assigned. 

All  of  the  above  will  be  located  in  the  same  build- 
ing with  one  consolidated  office  file  in  common  with 
the  Superintendent. 

All  reports  and  communications  on  the  Com- 
pany's business,  originating  on  this  division,  in- 
tended for  the  Superintendent  or  for  any  Assistant 
Superintendent  should  be  addressed  simply  "Assist- 
ant Superintendent"  (telegrams  "A.  S."),  no  name 
being  used  unless  the  communication  is  intended 
to  reach  an  official  away  from  his  headquarters,  or 
to  be  personal  rather  than  official,  in  which  latter 
case  it  will  be  held  unopened  for  the  person  ad- 
dressed. It  is  intended  that  an  Assistant  Superin- 
tendent shall  always  be  on  duty  in  charge  of  the 
division  headquarters  offices  during  office  hours.  The 
designation  of  a  particular  Assistant  Superintendent 
to  handle  specified  classes  of  correspondence  and  tele- 
grams is  a  matter  concerning  only  this  office.  Each 
official  transacts  business  in  his  own  name,  and  no 
person  should  sign  the  name  or  initials  of  another. 
The  principle  to  guide  subordinate  officials  and  em- 
ployees is  to  be  governed  by  the  latest  instructions 
issued  and  received. 

Train  orders  will  be  given  over  the  initials  of  the 


THE  UNIT   SYSTEM  19 

Train  Dispatcher  on  duty,  as  will  messages  origi- 
nated by  him. 

-The  modifications  of  pre-existing  organization 
and  methods  herein  ordered  have  been  carefully 
worked  out  to  expedite  the  Company's  business  by 
the  reduction  and  simplification  of  correspondence 
and  records.  It  is  expected  and  believed  that  of- 
ficials and  employees  will  insure  a  successful  outcome 
by  lending  their  usual  intelligent  co-operation  and 
hearty  support. 

Officials  and  other  persons  above  and  outside  the 
jurisdiction  of  this  division  are  requested  to  address 
official  communications,  intended  for  the  Superin- 
tendent or  for  any  Assistant  Superintendent,  simply : 

"Superintendent Division " 

(telegrams  "Supt."),  without  using  the  name  of  the 
Superintendent  except  for  personal  matter. 


Superintendent. 
Approved : 


General  Manager. 

This  unit  system  of  organization,  first  in- 
stalled in  January,  1909,  on  the  Nebraska  di- 
vision of  the  Union  Pacific  Railroad  at 
Omaha,  is  now  in  successful  operation  on 
twenty-seven  operating  divisions  and  on  six 
general  operating  jurisdictions,  a  total  of 
thirty-three  units  so  organized.  On  many  of 
these  the  application  of  the  underlying  prin- 
ciples has  been  consistent  and  earnest,  with 


20  MODERN   ORGANIZATION" 

corresponding  and  gratifying  beneficial  re- 
sults. On  a  few  the  application  has  been  too 
timid  and  perfunctory  to  secure  very  percep- 
tible^ benefits.  In  no  case,  however,  has  evi- 
dence materialized  of  any  positive  loss  of 
efficiency.  There  has  been  in  the  few  cases 
mentioned  a  negative  neglect  to  vi|alize\the 
latent  possibilities  of  the  new  systAn.  The 
personal  patience  of  Mr.  Kruttschnitt  is  as 
enduring  as  his  official  policies  are  far- 
sighted.  Eealizing  that  however  sound  in 
principle  might  be  the  new  organization,  its 
very  novelty  would  excite  the  opposition  of 
the  ultra-conservative,  he  declined  to  order 
its  adoption  but  placed  upon  me,  as  his  spe- 
cial representative,  the  duty  of  gaining  official 
converts  to  the  cause.  This  peripatetic  mis- 
sionary work  has  involved  traveling  some 
50,000  miles  per  year,  and  holding  countless 
meetings  and  conferences.  So  fine  is  the 
spirit  of  official  loyalty  on  the  Harriman 
Lines,  so  splendid  is  the  personnel,  that  the 
fatigues  of  strenuous  travel  are  forgotten  in 
the  pleasant  associations  and  delightful 
friendships  that  have  resulted.  To  question 
motives  or  to  permit  honest  differences  of 
official  opinion  to  affect  personal  relations 
would  be  to  preserve  a  relic  of  that  semi-bar- 


THE  UNIT   SYSTEM  21 

barons  feudalism  which  the  new  organization 
seeks  to  eradicate. 

The  number  of  assistant  general  managers 
may  vary  with  the  size  of  the  jurisdiction, 
but  is  normally  eight,  including  the  man  pre- 
viously the  assistant  general  manager,  who 
to  avoid  misunderstanding  is  reappointed  as 
the  senior  or  number  one  on  the  new  official 
list. 

Thus  far  the  list  has  not  included  any  su- 
perintendents of  dining  cars  as  contem- 
plated by  the  complete  plan.  Meanwhile  it  is 
probable  that  the  title  of  the  superintendent 
of  dining  cars  will  be  changed  to  ' '  chief  com- 
missary" to  avoid  confusing  him,  the  head 
of  a  department  covering  the  whole  road, 
from  the  division  superintendent  covering 
only  one  division. 

The  number  of  assistant  superintendents 
on  an  operating  division  varies  from  one  on 
a  very  small  division  to  twelve  on  one  very 
large  division.  The  normal  number  is  six, 
including  the  man  previously  the  assistant 
superintendent,  who  to  avoid  misunderstand- 
ing is  reappointed  as  the  senior  or  number 
one  on  the  new  list.  It  is  now  desired  to  in- 
crease this  normal  number  to  eight  by  taking 
in  the  division  storekeeper,  as  has  been  done 


22  MODERN  ORGANIZATION 

on  one  division,  and  the  station  inspector  or 
division  agent. 

A  district  comprising  two  or  more  divi- 
sions and  under  a  general  superintendent, 
is  a  more  or  less  incomplete  unit  sometimes 
created  intermediate  between  a  general  man- 
ager 's  property  and  a  superintendent's  oper- 
ating division.  This  is  organized  under  the 
unit  system  by  following  the  form  of  circu- 
lar for  the  general  manager's  office,  mutatis 
mutandis,  and  appointing  two  or  more  as- 
sistant general  superintendents,  the  normal 
number  being  three. 


OPERATION  OF  THE  UNIT  SYSTEM 


CHAPTER  II 
OPERATION  OF  THE  UNIT  SYSTEM 

A  NY  study  of  the  underlying  principles  of 
•**'  the  unit  system  must  take  into  account 
a  most  distinctive  characteristic  of  a  railway, 
namely,  its  physical  extent.  The  head  of  a 
manufacturing  plant,  of  a  bank,  or  of  a  de- 
partment store,  could  in  a  few  hours'  time 
personally  see  every  employee  of  the  estab- 
lishment and  observe  most  of  the  constitu- 
ent activities.  After  a  railway  once  begins 
business  no  division  superintendent  even  can 
hope  ever  to  see  all  of  his  trains  assembled 
or  all  of  his  employees  congregated  in  one 
place.  So  few  can  come  to  him  that  he  must 
go  to  them.  This  results  in  an  anomalous 
condition.  While  the  superintendent  or  other 
official  is  on  the  road,  the  routine  business 
at  headquarters  must  be  transacted  or  the 
company's  interests  will  suffer.  Under  a 
feudal  conception  that  because  the  superin- 
tendent is  an  official  he  can  be  in  at  least  two 
places  at  the  same  time,  it  is  the  custom  on 
most  railways  to  have  the  chief  clerk  at  head- 


MODERN  ORGANIZATION 

quarters  sign  the  name  of  the  absent  super- 
intendent to  official  communications.  This 
dishonest  violation  of  the  fundamental  laws 
of  matter  is  supported  by  the  same  subtle 
arguments,  the  same  legal  fictions,  with 
which  the  learned  men  of  the  Middle  Ages 
sought  to  bolster  up  the  untenable  conception 
of  feudal  authority.  As  a  government  of 
laws  replaces  a  government  of  men,  so  must 
what  is  known  as  "government  by  chief 
clerks"  be  eradicated  from  corporate  admin- 
istration. When  the  superintendent  is  ab- 
sent from  headquarters  the  chief  clerk  per- 
force handles  communications  to  such  subor- 
dinate officials  as  the  master  mechanic,  the 
division  engineer,  the  trainmaster,  etc.,  offi- 
cers all  receiving  larger  salaries  than  the  en- 
titled chief  clerk  and  presumably  men  of 
wider  experience  and  better  qualifications 
than  he.  Sooner  or  later  every  chief  clerk 
oversteps  the  tenuous  line  and  in  the  name 
of  routine  business  is  consciously  or  uncon- 
sciously restricting  the  authority  or  activity 
of  those  who  are  in  reality  his  official  supe- 
riors. Here  comes  in  an  amiable  failing  of 
human  nature,  against  which  it  is  the  prov- 
ince of  organization  as  a  science  to  impose 
a  check.  Every  official  flatters  himself:  "My 


OPERATION  OF  THE  UNIT  SYSTEM  27 

chief  clerk  never  does  that.  He  knows  me 
too  well  and  appreciates  my  unwillingness  to 
stand  for  such  things." 

It  is  an  interesting  fact  that  the  official 
who  is  most  zealous  in  defending  his  own 
chief  clerk  is  often  the  one  quickest  to  squirm 
under  the  acid  test  of  an  inquiry  as  to  the 
sense  of  proportion  maintained  by  the  chief 
clerk  of  the  official  next  above.  Singularly 
enough,  promote  the  official  to  the  position 
higher  up,  make  the  offending  chief  clerk  his 
own,  and  the  assuming  marplot  becomes  a 
model  of  discerning  judgment.  The  conclu- 
sion is  obvious  that  such  an  universal  state 
of  affairs  must  indicate  the  viciousness  of  a 
fallacious  system  rather  than  the  shortcom- 
ings of  a  particular  set  of  individuals. 

The  unit  system  of  organization  eliminates 
"government  by  chief  clerks"  by  insisting 
that  no  person  shall  sign  the  name  or  initials 
of  another.  A  man's  name  is  his  birthright, 
as  his  signature  is  his  patent  of  enlightened 
manhood.  The  underlying  sociological  prin- 
ciple is  that  the  individual  is  the  indivisible 
unit  of  society.  Since  the  business  must  go 
on  and  no  person  may  sign  for  another,  it 
follows  that  a  sufficient  number  of  duly  quali- 
fied officers  must  be  appointed.  By  giving 


28  MODERN   ORGANIZATION" 

all  the  uniform  title  of  assistant  this  or  that, 
every  one  is  available  for  prompt  compre- 
hensive action  should  occasion  so  require. 
An  attempt  at  description  in  a  title  may  be 
too  restrictive  by  inferentially  debarring  all 
features  not  specifically  included.  In  deal- 
ing with  human  nature  a  reasonable  degree 
of  elasticity  is  preferable  to  that  rigidity 
which  is  often  so  essential  in  treating  mate- 
rial things.  Engineers  from  familiarity  with 
working  applications  of  the  laws  of  matter 
often  unconsciously  impose  too  rigid  re- 
quirements upon  society.  Engineers  who  de- 
sign and  construct  public  utilities  must  study 
the  psychology  of  the  crowd. 

Apart  from  the  basic  objection  to  the  chief- 
clerk  system  is  the  practical  disadvantage  of 
having  outside  matters  decided  and  acted 
upon  by  a  man  whose  experience  has  usually 
been  limited  to  the  inside  of  an  office.  This 
lack  of  sympathetic  viewpoint  with  the  diffi- 
culties of  outside  problems  is  often  the  cause 
of  unnecessary  expense  on  the  outside.  The 
sailor  at  sea,  the  traveling  salesman  on  the 
road,  the  soldier  in  the  field,  the  railroad  man 
on  the  line,  all  have  their  troubles  with  the 
man  in  the  office.  Human  nature  is  the  same 
'whether  engaged  in  navigating  the  ocean, 


OPERATION  OF  THE  UNIT  SYSTEM  29 

selling  goods,  making  campaigns,  or  pro- 
ducing transportation.  The  unit  system  min- 
imizes the  undesirable  features  of  the 
necessary  partial  control  from  a  central  of- 
fice by  insisting  that  such  inside  direction 
shall  be  exercised  only  by  officials  duly  quali- 
fied by  outside  experience. 

This  requirement  is  worked  out  in  prac- 
tice by  having  normally  at  headquarters  the 
senior  assistant,  who  is  in  effect  though  not 
in  name  the  chief  of  staff.  At  the  headquar- 
ters of  an  operating  division  he  is,  as  stated, 
the  man  who  was  previously  to  reorganiza- 
tion the  assistant  superintendent  of  the  di- 
vision. The  former  chief  train  dispatcher 
of  the  division  is  usually  started  near  the 
foot  of  the  list  of  assistants.  His  duties  are 
unchanged  and  he  remains  at  headquarters 
handling  such  endless  details  of  operation  as 
directing  the  work  of  train  dispatchers  and 
telegraph  and  telephone  operators,  assign- 
ing locomotives,  distributing  cars,  manning 
trains;  in  fact,  he  is  the  incarnation  of  de- 
tailed administrative  activity.  At  a  normal 
division  headquarters,  then,  there  are  two  as- 
sistant superintendents  on  duty,  one  as  chief 
of  staff,  the  other  as  chief  dispatcher,  one  the 
senior  and  the  other  a  junior,  one  a  distinct 


30  MODERN  ORGANIZATION 

head  of  the  office,  the  other  in  effect  his  sen- 
ior 's  aide.  Both  assistants  being  clothed 
with  authority,  either  can  act  on  any  prob- 
lem that  may  suddenly  develop  in  an  unfore- 
seen absence  of  the  other.  On  divisions  of 
very  light  traffic  one  assistant  at  headquar- 
ters may  be  sufficient. 

No  distinct  grade  of  senior  or  chief  as- 
sistant is  created  in  any  unit.  Normally 
number  one,  the  real  senior,  is  "on  the  lid," 
as  it  is  termed,  at  headquarters,  and  is  ex- 
cused from  outside  road  duties.  In  case  of 
his  prolonged  absence,  the  head  of  the  unit, 
the  general  manager,  or  the  superintendent, 
as  the  case  may  be,  designates  the  most  avail- 
able of  the  other  assistants  to  remain  at 
headquarters  and  sit  on  the  lid.  An  unwrit- 
ten law  here  operates  to  make  such  desig- 
nated assistant  the  chief  or  senior  of  all  the 
others  for  the  time  being.  No  formal  an- 
nouncement of  such  designation  is  necessary. 
A  railroad  does  not  change  its  physical  loca- 
tion frequently,  as  does  a  fleet  or  an  army, 
and  the  chance  of  confusion  of  relative  rank 
is  remote.  Advantage  is  taken  of  this  elas- 
tic feature  of  assignment  on  some  divisions  to 
rotate  various  assistants  through  the  senior 
chair  in  order  to  gain  the  splendid  compre- 


OPERATION  OF  THE  UNIT  SYSTEM  31 

hensive  training  for  higher  positions  which 
the  position  affords.  Assistants  thus  fa- 
vored are  unanimous  in  expressions  of  ap- 
preciation for  the  valuable  knowledge  and 
experience  acquired. 

The  feature  of  consolidating  office  records 
in  one  common  file  is  taken  from  the  civil 
courts.  At  a  city  hall  or  a  court  house  there 
may  be  a  dozen  judges  occupying  the  benches 
of  the  various  courts,  but  there  is  normally 
only  one  clerk  of  the  court,  with  the  neces- 
sary deputies,  one  office  of  record  for  all. 
When  one  judge  wishes  to  know  what  an- 
other judge  has  done  he  does  not  write  a 
letter  and  open  up  a  file,  as  does  frequently 
one  corporation  official  across  the  hall  from 
another.  No,  the  judge  sends  to  the  clerk's 
office  and  gets  the  complete  record  in  the 
case.  Under  the  unit  system  the  official  sends 
to  the  file  room  for  all  the  papers.  The  con- 
solidated file  is  perhaps  the  most  universally 
popular  feature  of  the  unit  system.  It  is  es- 
timated that  its  introduction  in  the  operat- 
ing department  of  the  Harriman  Lines  has 
thus  far  resulted  in  the  elimination  of  over 
half  a  million  letters  per  year.  These  un- 
necessary letters  were  harmful  rather  than 
helpful  since  they  retarded  administration. 


32  MODERN  ORGANIZATION 

Often  by  attempting  to  think  for  the  other 
man  they  dwarfed  individual  initiative. 

Each  assistant  when  at  headquarters 
signs  communications  to  subordinates  in  that 
branch  of  work  in  which  he  is  technically  ex- 
pert and  for  which  he  is  held  responsible  by 
the  head  of  the  unit.  For  example,  the  main- 
tenance assistant  superintendent  issues 
instructions  to  his  roadmasters  or  track 
supervisors;  the  mechanical  assistant  to  his 
engine-house  foremen  or  car-repair  foremen ; 
the  transportation  assistant  to  his  yardmas- 
ters,  etc.,  etc.  Each,  however,  after  signing 
is  supposed  to  send  his  communication  over 
the  desk  of  the  senior  assistant,  both  for  the 
latter 's  information  and  for  review  and  co- 
ordination. This  has  proved  a  valuable 
check  upon  official  caprice  in  issuing  unneces- 
sary instructions.  More  energy  is  now  ex- 
pended in  seeing  that  instructions  already 
issued  are  carried  out,  and  less  in  pro- 
mulgating those  that  in  themselves  may 
unconsciously  confess  a  laxity  in  previous 
enforcement.  It  is  obvious  that  under  this 
system  the  senior  assistant  has  a  most  com- 
prehensive knowledge  of  the  affairs  of  the 
unit.  The  head  and  the  other  assistants  come 
and  go  between  the  road  and  the  office.  The 


OPERATION  OF  THE  UNIT  SYSTEM  33 

senior  assistant  has  a  practical  grasp  of 
operation  that  enables  him  to  aid  the  head  of 
the  unit  in  balancing  its  component  elements, 
in  minimizing  departmental  jealousies,  and 
in  engendering  a  spirit  of  team  work.  The 
consolidated  file  is  helpful  in  producing  a  get- 
together  feeling. 

When  the  head  of  the  unit  or  any  assist- 
ant is  on  the  road,  he  is  represented  at  head- 
quarters not  by  a  chief  clerk  but  by  a  chief 
of  staff,  the  senior  assistant,  who  transacts 
business  in  his  own  name.  This  somewhat 
elaborate  covering  of  headquarters  results 
as  intended  in  more  traveling  and  in  better 
outside  supervision  by  the  other  assistants. 
Their  increased  availability  for  outside  work 
is  the  strongest  of  the  several  strong  feat- 
ures of  the  system,  and  will  be  more  fully 
discussed  in  the  next  chapter. 


BROADENING  THE  IDEALS  OF  LINE 
SUPERVISION 


CHAPTER  III 

BROADENING    THE    IDEALS    OF    LINE 
SUPERVISION 

most  railways,  if  the  division  engineer, 
while  riding  on  the  rear  of  the  train  to 
inspect  track,  should  tell  the  young  flagman 
that  the  latter  had  not  gone  back  far  enough 
to  protect  the  train,  friction  might  result. 

If  the  flagman,  mayhap  of  brief  service 
and  little  experience,  did  not  tell  the  division 
engineer,  an  old  and  tried  officer,  to  go  to 
blazes,  the  trainmaster  perhaps  would  do  so. 
The  feudal  notion  "you  have  interfered  with 
my  man"  would  prevail,  rather  than  the 
broader  concept  of  the  best  interests  of  the 
company  and  the  public.  Let  the  division  en- 
gineer invoke  the  more  formal  procedure  of 
reporting  the  flagman.  The  trainmaster 
might  take  such  action  as  an  implied  reflec- 
tion upon  his  own  efficiency,  and  uncon- 
sciously constitute  himself  attorney  for  the 
defense.  The  papers  would  grind  through 
the  official  baskets,  and  perhaps  weeks  later 
return  to  the  division  engineer  in  such  man- 
37 


38  MODERN  ORGANIZATION 

ner  as  by  inference  to  discredit  his  judg- 
ment. The  natural  effect  is  for  the  division 
engineer  to  lose  interest  in  the  efficiency  of 
flagmen  and  to  confine  his  attention  to  his 
own  specialized  activity.  His  salary  and  ex- 
pense account  continue  undiminished,  and 
the  company  and  the  public  lose  just  so  much 
of  his  possible  efficiency. 

Under  the  unit  system  of  organization,  the 
old  division  engineer  is  an  assistant  superin- 
tendent. Unrestricted  by  the  limitations  of 
a  descriptive  title,  the  presumption  is  in  his 
favor  rather  than  in  that  of  an  inexperienced 
employee.  For  the  bundle  of  letters  result- 
ing from  a  written  report,  which  are  in  the 
nature  of  a  technical  appeal  to  higher  au- 
thority, there  is  substituted  a  man  to  man 
contact,  the  rough  and  ready  justice  of  the 
police  court,  which  is  usually  a  pretty  good 
brand  of  justice.  Were  the  division  officials 
a  set  of  callow  youths  with  immature  judg- 
ment an  undesirable  condition  might  result. 
Fault  finding  and  nagging  might  replace  the 
comprehensive  supervision  that  is  desired. 
No  such  effect,  however,  has  been  encoun- 
tered. The  officials  concerned  have  shown 
themselves  possessed  of  that  poise  which  is 
to  be  expected  from  years  of  experience  in 


BROADENING  LINE  IDEALS  39 

directing  their  fellow  men.  So  far  from  uni- 
formity of  titles  producing  a  conflict  of  au- 
thority, the  result  has  been  the  opposite.  The 
difficulty  on  the  Harriman  Lines  has  been 
rather  in  getting  the  officials  to  interest 
themselves  along  broader  lines  of  activity. 
It  is  much  better  that  the  departure  from 
the  ideal  should  be  in  this  direction,  since  no 
fatality  to  the  general  scheme  is  involved. 
The  broadened  usefulness  must  be  a  matter 
of  gradual  development.  It  was  recognized 
in  the  beginning  that  maximum  improvement 
could  be  obtained  only  with  a  new  generation 
of  officials.  Experience,  however,  has  vindi- 
cated the  wisdom  of  making  a  comprehensive 
start  and  securing  whatever  gain  may  be 
practicable.  Perhaps  the  most  creditable 
feature  of  the  installation  of  the  new  system 
is  the  fact  that  results  have  been  obtained 
with  the  official  talent  at  hand.  No  importa- 
tions of  enthusiasts  and  no  infusion  of  fresh 
blood  have  been  found  necessary.  The  good 
old  wheel-horses  have  shown  their  ability  to 
move  somewhat  faster  when  the  way  is  made 
easier;  when  the  ruts  of  narrowing  special- 
ties and  the  hurdles  of  departmental  preju- 
dices have  been  removed.  The  changes  have 
thus  been  made  without  demoralizing  the 


40  MODERN   ORGANIZATION 

service.  This  consideration  for  the  individ- 
uals concerned  has  increased  rather  than  de- 
creased the  esprit  de  corps. 

Under  the  old  order  of  things,  if  a  train 
happened  to  arrive  late  with  the  master  me- 
chanic on  board,  he  would  be  interested  only 
in  knowing  that  the  locomotive  and  equip- 
ment were  in  good  shape;  that  the  engine- 
men,  firemen,  and  car  inspectors  had  per- 
formed their  duties  properly.  Whether  or 
not  the  conductor  had  been  slow  in  going  for 
orders  at  each  telegraph  office;  whether  or 
not  the  train  dispatcher  had  used  poor  judg- 
ment ;  whether  or  not  station  forces  had  been 
alert  in  handling  train  baggage;  whether  or 
not  there  had  been  team  work  as  between 
train  men  and  engine  men,  would  be  ques- 
tions of  little  moment  to  the  master  mechanic. 
In  fact,  if  interrogated  on  the  subject  his 
tendency  would  be  to  minimize  the  shortcom- 
ings of  the  mechanical  activities  by  empha- 
sizing the  derelictions  of  the  other  employees. 
He  became  unconsciously  a  breeder  of  fric- 
tion. As  an  assistant  superintendent,  he  can 
be  held  responsible  for  a  judicious  enforce- 
ment of  all  regulations,  for  an  almost  uncon- 
scious development  of  harmonious  efforts  on 
the  part  of  all  concerned.  The  more  easily 


BROADENING  LINE  IDEALS  41 

that  he  produces  this  composite  efficiency,  the 
more  fully  does  he  meet  the  test  of  his  own 
capacity  for  true  leadership.  That  tradi- 
tional horse  which  the  world  has  been  lead- 
ing to  water,  will,  with  proper  handling,  be 
drinking  before  he  has  time  to  realize  the 
impossibility  of  such  desirable  consumma- 
tion being  enforced. 

Again,  the  old  trainmaster,  now  an  assist- 
ant superintendent,  after  an  all  night  chap- 
eronage  of  a  freight  train,  may  pull  up  at  a 
water  tank  at  7:15  A.  M.  If  by  chance  he 
then  observes  a  section  gang  beginning  to 
think  about  going  to  work,  he  need  not,  and 
does  not,  because  of  being  an  assistant 
superintendent,  read  the  riot  act  to  the  be- 
lated section  foreman.  A  considerate  in- 
quiry as  to  "what  are  your  working  hours ?" 
or  "what  time  does  the  roadmaster  (or  track 
supervisor)  expect  you  to  turn  out  in  the 
morning?"  is  all  that  may  be  necessary. 
There  may  be  a  good  reason  for  the  seem- 
ing departure  from  normal  conditions.  The 
presumption  must  be  in  favor  of  the  faith- 
ful old  employee.  The  moral  effect  of  the 
official  inquiry,  if  considerately  made,  will  be 
far  reaching. 

The  examples  cited  from  actual  practice 


42  MODERN  ORGANIZATION 

indicate  the  extreme  difficulty  of  adequate 
supervision  of  so  extensive  a  plant  as  a  rail- 
way. They  also  illustrate  the  necessity  for 
that  human  touch  which  alone  can  restore 
that  feeling  of  individual  responsibility 
which  is  so  vital  for  the  successful  adminis- 
tration of  the  modern  corporation.  All  nor- 
mal men  have  an  inherent  respect  for  duly 
constituted  authority.  This  natural  feeling 
of  respect  is  alienated  when  authority  is  ex- 
ercised at  long  range  by  untrained  office  med- 
dlers. It  borders  on  the  cowardly  to  ascribe 
to  the  labor  unions  alone  the  responsibility 
for  decreased  efficiency.  The  educated  and 
entrepreneur  class,  the  elder  brothers  of  so- 
ciety and  industry,  have  the  larger  measure 
of  responsibility.  The  unit  system  of  organ- 
ization substitutes,  for  the  pink-tea  contact 
of  the  typewriter  and  the  telephone,  the 
strong  coffee  of  the  caboose  and  the  ham-and- 
egg  association  of  the  dinner  bucket. 

Superficial  critics  of  the  unit  system  have 
deplored  the  elimination  of  distinctive  titles. 
They  claim  that  a  man  loses  his  identity  as 
an  engineer,  for  example,  that  he  cannot  hope 
to  acquire  standing  in  his  chosen  profession. 
The  answer  to  this  is  that  great  industrial 
corporations  create  professions  of  their  own. 


BROADENING  LINE  IDEALS  43 

The  whole  is  greater  than  any  of  its  parts. 
A  man  qualified  to  be  an  administrative  offi- 
cial of  a  large  corporation  is  directing  an  ac- 
tivity greater  than  any  such  component  as 
civil  engineering,  mechanical  engineering, 
electrical  engineering,  etc.  If  his  ambition 
is  for  distinction  in  any  of  these  hon- 
orable branches  alone,  he  should  seek 
general  practice  and  not  make  the  ser- 
vice of  any  particular  corporation  his  life- 
work.  Military  rank  has  not  prevented  cer- 
tain engineers  and  surgeons  of  the  Army  and 
Navy  from  acquiring  distinction  in  their 
technical  specialties.  On  the  contrary,  the 
prestige  of  permanent  status  in  an  all-includ- 
ing profession  creates  a  presumption  most 
helpful  in  securing  prompt  recognition  of 
specialized  technique.  In  the  immortal  words 
attributed  to  the  father  of  the  railway  pro- 
fession, George  Stephenson,  the  greatest 
branch  of  engineering  is  the  engineering  of 
men. 


OVER-SPECIALIZATION 


CHAPTER  IV 
OVER-SPECIALIZATION 

increasing  difficulty  of  securing  men 
to  fill  the  higher  official  positions  in 
large  corporations  is  due  mainly  to  over- 
specialization.  The  line  of  least  resistance 
has  proved  too  tempting.  Emerson  says  that 
we  are  all  as  lazy  as  we  dare  to  be.  A  mani- 
festation of  unconscious  laziness  may  be  the 
habit,  bred  by  specialization,  of  side-stepping 
complete  responsibility  by  passing  the  ques- 
tion to  another  specialist.  The  great  prob- 
lem in  organization  is  to  develop,  under 
modern  conditions,  the  old-time  feeling  of  in- 
dividual responsibility. 

A  man  whose  mental  tendency  is  to  meet 
responsibilities  squarely  must  perforce  ac- 
quire knowledge  of  more  than  one  thing. 
Such  acquisition  broadens  his  concept,  in- 
creases his  confidence,  and  should  delight  his 
superiors.  "Where  highly  specialized  depart- 
ments are  created,  departmental  jealousies 
may  normally  be  expected.  Loyalty  is  meas- 
ured by  devotion  to  the  department  rather 
47 


48  MODERN   ORGANIZATION 

than  to  the  corporation.  Not  only  is  there  a 
negative  lack  of  incentive  in  learning  the 
work  of  another  department,  but  there  is  pos- 
itive objection  to  crossing  sacred  depart- 
mental lines.  Since  owing  to  the  size  of  the 
proposition  departments  are  necessary,  the 
problem  is  to  develop  the  all-round  man  un- 
der such  restrictive  conditions.  One  remedy, 
often  difficult  of  application,  is  the  rotation 
of  selected  individuals  from  one  department 
to  another.  Another  is  a  sufficiently  early 
elevation  of  individuals  to  positions  which 
have  dealings  with  all  departments.  The  lat- 
ter method,  by  no  means  ideal,  depends  en- 
tirely upon  the  ability  and  the  responsiveness 
of  the  individual  promoted.  In  any  case,  the 
problem  is  easier  where  the  number  of  de- 
partments is  minimized.  Specialization  run- 
ning rampant  is  often ,  responsible  for  the 
creation  of  unnecessary  departments.  A 
striking  example  is  the  tendency  of  corpora- 
tions to  exaggerate  the  importance  of  such 
component  functions  as  accounting,  supply 
and  purchase. 

Large  corporations  (including  govern- 
ments, the  largest  of  all)  early  discover  the 
necessity  for  a  cadet  system  of  training  com- 
petent officers.  This  simplifies  the  problem, 


T-  - 

OVER-SPECIALIZATION  49 

since  talent  can  be  caught  young  enough  for 
the  broadest  development.  A  cadet  system 
may  fall  short  if  post-graduate  activities  are 
too  highly  specialized  for  too  long  a  period 
of  time.  The  railways  and  other  industrial 
corporations  are  many  of  them  too  young, 
as  corporate  entities,  to  have  developed  as 
yet  a  cadet  system.  As  shown  by  the  prac- 
tical experience  of  the  Harriman  Lines,  some 
men  old  enough  to  have  attained  official  rank 
can  nevertheless  be  broadened  for  the  highest 
positions  by  a  proper  system  of  organization. 
The  amalgamation  of  the  steam  engineers 
with  the  line  of  the  United  States  Navy  is 
another  notable  example.  That  not  all  old 
dogs  can  be  taught  new  tricks  is  no  reason 
for  denying  opportunity  to  those  who  can. 
Every  new  trick  the  dog  learns  becomes  an 
asset  of  value  to  his  master.  Beyond  an 
easily  determined  point  of  self-respect  it 
should  not  be  what  the  dog  wants,  but  what 
the  master  needs.  The  Nineteenth  Century 
in  the  name  of  specialization  badly  over- 
specialized.  The  problem  of  the  Twentieth 
Century  is  to  swing  back  to  a  balanced  spe- 
cialization. All  of  us  believe  in  specializa- 
tion. Where  we  differ  is  as  to  the  pointT 
where  logical  specialization  ends  and  over- 


50  MODERN   ORGANIZATION 

specialization  begins.  The  corollary  of  spe- 
cialization is  centralization.*  The  corollary 
of  over-specialization  is  over-centralization. 
The  more  highly  specialized  the  activity,  the 
more  remote  becomes  the  point  of  converg- 
xlence  of  complete  authority. 

Organization  as  a  science  demands  a  check 
against  the  amiable  failing  of  human  nature 
to  exaggerate  the  importance  of  its  own 
specialty.  ^Esop  caught  the  idea  in  his  fable 
of  the  quarrel  among  the  organs  of  the  body 
as  to  their  relative  importance.  Each  is  use- 
less when  alone.  Each  derives  its  import- 
ance from  its  relation  to  the  others.  Perhaps 
the  best  practical  check  against  corporate 
;  over-specialization  is  the  rotation  of  func- 
>/tions.  The  best  farmers  rotate  their  crops. 
Where  man  is  most  active  and  useful,  Nature 
rotates  her  seasons.  Biology  teaches  that 
death  comes  more  quickly  where  rotation  is 
absent. 

Like  all  other  good  things,  rotation  can 
easily  be  overdone.  The  permanent  special- 
ist may  be  justified  when  he  has  demon- 
strated his  fitness  as  an  all-round  man.  He 

*  Manifestly,  Major  Hine  refers  to  centralization  of 
control  over  functional  activities — to  concentration  of 
administrative  power — and  not  to  mere  social  central- 
ization, as  of  individuals  in  cities  or  of  labor  in  large 
Industrial  or  operating  organizations. — THE  EDITOB, 


OVER-SPECIALIZATION  51 

can  best  learn  everything  of  something  when 
he  has  first  learned  something  of  everything. 
Epochs  in  the  advance  of  society  are  all 
marked  by  cosmic  tendencies.  Modern  spe- 
cialization had  its  birth  in  the  necessities  im- 
posed by  the  wonderful  achievements  of  the 
Nineteenth  Century.  Invention  cleaved  its 
way  through  the  ranks  of  civilization  and 
scattered  complete  organizations  of  local  so- 
ciety into  groups  of  specialized  activities. 
Many  men  mistake  the  immediate  for  the  ul- 
timate. There  was  a  disposition  to  regard 
this  condition  as  permanent.  The  inventor 
and  the  engineer,  men  of  tangible  things,  out- 
stripped the  philosopher  and  the  sociologist, 
men  of  intangible  things.  As  society  catches 
its  own  breath  it  demands  more  even  run- 
ning from  its  leaders. 

>^As  specialization  produces  centralization, 
so  in  turn  centralization  develops  bureau- 
cratic administration.  The  specialist  who 
derived  his  official  existence  from  expert 
knowledge  carefully  acquired  may  soon  lose 
his  sense  of  proportion.  He  unconsciously 
drifts  into  feeling  that  any  one  in  his  depart- 
ment must  be  an  expert  because  the  head  is 
an  expert.  Thus  we  find  the  chief  engineer 
insisting  that  technical  matters  should  be 


52  MODERN  ORGANIZATION 

handled  by  his  department  alone.  Investi- 
gation may  develop  that  such  handling  is 
turned  over  to  a  non-technical  man,  the  chief 
clerk,  for  final  action.  The  chief  engineer 
feels,  unconsciously  of  course,  that  even  a 
layman,  if  so  fortunate  as  to  be  associated 
with  the  head,  must  absorb  both  technical 
knowledge  and  divine  afflatus  from  such  con- 
tact. Unquestionably,  the  best  experts  are 
those  who  can  impart  a  working  knowledge 
to  the  layman.  The  objection  to  the  chief- 
clerk  system  is  that  a  half-way  condition  is 
stretched  into  doing  duty  for  what  should  be 
a  complete  proposition.  If  the  matter  in 
hand  is  so  highly  technical  as  to  demand  an 
expert,  the  administrative  activity  should  not 
be  delegated  to  a  layman.  If,  on  the  other 
hand,  it  has  reached  the  stage  of  administra- 
tive routine,  it  makes  for  more  comprehen- 
sive and  harmonious  results  to  have  action 
taken  by  a  duly  qualified  officer. 

Society  has  so  far  emerged  from  feudal- 
ism, politically  speaking,  that  a  stenographer 
would  no  more  think  of  taking  the  place  of 
a  judge  on  the  bench  than  a  lay  reader  would 
think  of  attempting  all  the  functions  of  a  duly 
ordained  clergyman.  Organized  society,  how- 
ever, as  reflected  through  modern  corpora- 


OVER-SPECIALIZATION  53 

tions,  is  so  steeped  in  feudalism  that  the 
stenographer  may  be  habitually  signing  the 
name  of  the  corporate  officer.  It  is  an  echo 
of  the  mediaeval  period  when  the  feudal  lord 
was  considered  omnipresent  within  his  do- 
minions even  though  he  might  be  absent  on 
a  crusade  to  the  Holy  Land. 

When  one  person  signs  the  name  of  an- 
other the  effect  produced  is  not  that  of  either 
one  or  the  other,  but  of  a  fraction  of  both — 
an  undesirable  sociological  condition.  Col- 
lectivism and  altruism,  as  indispensable 
blessings  of  modern  society,  fall  short  if  the 
individual  is  not  preserved  as  an  indivisible 
unit.  Such  violations  of  principle  were  less 
material  when  society  was  organized  into 
smaller  groups.  The  advent  of  the  modern 
corporation  necessitates,  in  administrative 
life,  the  same  relative  checks  and  balances 
for  the  preservation  of  the  identity  and  re- 
sponsibility of  the  individual  as  have  been 
imposed  by  constitutional  limitations  and 
otherwise  in  political  life.  Thus  when  busi- 
ness was  carried  on  by  a  family  or  a  part- 
nership it  mattered  comparatively  little  if 
one  person  signed  for  another,  since  the  mu- 
tual understanding  was  so  thorough  and 
complete,  or  because  each  of  the  persons  con- 


54  MODERN  ORGANIZATION 

cerned  was  a  part  owner.  In  the  adminis- 
tration of  a  large  corporation,  however,  the 
officers  and  employees  are  trustees  in  vary- 
ing degrees  of  rank.  When  an  officer  is  ab- 
sent, actually  or  constructively,  the  person 
who  acts  does  not  represent  the  absent  offi- 
cer but  the  corporation.  If  Eichard  Eoe  acts 
in  the  absence  of  John  Doe,  a  corporation 
officer,  the  signature  should  not  be  "John 
Doe,  per  Eichard  Eoe;"  but  should  be 
"  Eichard  Eoe  for  and  in  the  absence  of  John 
Doe."  The  explanatory  phrase  "for  and  in 
the  absence  of"  is  largely  a  question  of  good 
manners.  It  explains  the  seeming  presump- 
tion of  Eichard  Eoe  in  acting,  and  the  appar- 
ent discourtesy  or  neglect  of  John  Doe  to 
give  the  matter  personal  attention.  The 
point  of  it  all  is  that  Eichard  Eoe  is  acting 
for  the  corporation.  He  has  been  thrown  into 
administrative  gear,  more  or  less  automati- 
cally as  the  arrangement  for  succession  in 
authority  is  elastic  or  rigid. 

The  science  of  organization  insists  that 
chains  of  authority  and  lines  of  succession 
shall  be  carefully  outlined.  The  ideal  condi- 
tion would  be,  after  developing  competent 
men,  to  have  the  same  men  continuously  do- 
ing the  same  work.  This  condition  of  spe- 


OVER-SPECIALIZATION  55 

cialization  is  manifestly  unattainable  owing 
to  the  wear  and  tear  on  individuals  and  to 
the  accidents  of  service.  Specialization  in 
assignment  has  therefore  decided  limitations. 
Wise  organizers  recognize  this  fact  and  pro- 
vide sufficient  officers  to  give  comprehensive 
action  under  all  conditions  of  service.  Un- 
wise organizers  fool  themselves  into  believ- 
ing that  by  some  hocus  pocus  a  half-baked 
understudy  can  perform  a  complete  part. 

Under  the  more  primitive  conditions  of  the 
past  there  has  been  less  necessity  for  a 
knowledge  of  the  science  of  organization. 
Supply  follows  demand,  and  the  practical 
necessity  for  this  knowledge  is  attracting  the 
attention  of  thinking  men  the  world  over. 
Administration  as  an  art  is  very  old.  Organ- 
ization as  a  science  is  very  new.  There  are 
a  hundred  good  administrators  for  every 
good  organizer.  That  which  often  passes  for 
good  organization  is  high-class  administra- 
tion, through  splendid  personal  equations, 
of  what  is  in  fact  unscientific  organization. 

One  bar  to  progress  is  the  fact  that  nearly 
every  man  intrusted  with  authority  over  his 
fellows  flatters  himself  that  he  is  a  born  or- 
ganizer. Flattery  is  never  more  deceptive 
than  when  applied  to  one 's  self. 


FALLACIES   OF   ACCOUNTING 


CHAPTER  V 
FALLACIES  OF  ACCOUNTING 

SO  rapid  has  been  the  growth  of  modern  in- 
dustry, so  extensive  is  the  volume  of  ac- 
tivity, so  imperative  is  the  necessity  for  a 
check  of  some  kind  against  extravagance  and 
corruption,  that  accounting  as  a  function  has 
assumed  an  importance  far  beyond  its  true 
proportion. 

Accounts  are,  in  fact,  but  a  measure  of 
performance,  not  performance  itself.  Ac- 
counts are  but  a  yardstick.  So  prone  is  hu- 
man nature  to  mistake  incidentals  for  essen- 
tials that  through  long  use  the  yardstick  ac- 
quires a  fictitious  value.  Experience,  up  to 
the  period  of  obsolescence,  ripens  the  human 
being  and  increases  his  efficiency.  The  yard- 
stick, however,  like  most  inanimate  things, 
after  being  once  properly  tested  is  none  the 
better  for  having  made  ten-thousand  meas- 
urements. This  failure  to  distinguish  be- 
tween the  animate  and  the  inanimate  finds 
extensive  expression  in  the  interior  organi- 
zation of  modern  society. 
59 


60  MODERN  ORGANIZATION 

The  accountant  attempts  to  tell  us  that 
money  has  been  legally  and  honestly  ex- 
pended. He  is  usually  powerless  to  say 
whether  or  not  the  expenditure  has  been  effi- 
cient and  therefore  economical.  Any  one  can 
make  vouchers  match  and  columns  balance  if 
he  fudges  long  enough.  It  is  not  every  one, 
however,  who  can  organize  and  direct  the  di- 
vine forces  of  nature,  divine  because  they  are 
human.  At  the  outset  too  often  the  engineer 
of  men  finds  himself  handicapped  by  the  pur- 
veyor of  figures.  Efficiency  too  often  is  meas- 
ured by  book  balances  and  statistical  reports 
rather  than  by  expert  inspection  of  actual 
conditions  and  performances. 

Class  consciousness  is  as  expensive  indus- 
trially as  it  is  undesirable  sociologically.  The 
accountant,  being  human,  exaggerates  his 
own  specialty,  and  gets  away  with  the  propo- 
sition because  the  director  of  men  and  things 
may  scorn  to  meet  the  accountant  with  the 
latter 's  weapons.  Organization  as  a  science 
demands  that  the  two  get  together,  not  in 
combat,  but  in  co-operation.  When  he  wakes 
up,  the  technical  director  has  all  the  advan- 
tage. He  can  learn  accounts  much  more 
easily  than  the  accountant  can  acquire  tech- 
nical knowledge.  A  concrete  application  of 


FALLACIES  OF  ACCOUNTING  61 

this  principle  is  found  on  some  railways,  in- 
cluding the  Harriman  Lines  and  the  Pennsyl- 
vania System.  There,  the  disbursement  ac- 
counts are  kept  by  geographical  operating 
division  under  the  direction  of  the  responsi- 
ble operating  officer,  the  division  superin- 
tendent. The  underlying  theory  is  that  ac- 
counts as  part  of  every-day  working  tools 
should  be  available  first  hand  for  prompt  and 
effective  measure  of  performance;  that  it  is 
manifestly  unfair  to  expect  to  hold  officers 
responsible  for  results  and  at  the  same  time 
deny  them  first-hand  knowledge  of  existing 
conditions.  On  most  railways  and  in  many 
other  large  industrial  corporations,  account- 
ing is  regarded  as  a  sacred  mystery  beyond 
the  ken  of  the  every-day  operating  man.  The 
result  of  such  illogical  specialization  is  re- 
flected in  a  remote  centralization  of  function. 
The  scorer  is  too  far  from  the  game.  Indi- 
vidual batting  averages  acquire  a  greater  rel- 
ative value  than  sacrifice  hits  which  may 
bring  in  winning  runs. 

One  of  the  reasons  that  banks  enjoy  the 
general  confidence  of  the  public  is  because 
of  their  highly  localized  operation.  The 
greatest  financial  institutions  work  only 
through  more  or  less  individualized  corre- 


62  MODERN  ORGANIZATION 

spondents.  Each  bank  is  made  a  complete, 
self-contained  unit  under  a  president  or  man- 
ager, who  controls  directly  and  completely 
his  bookkeepers.  If  banks  had  fallen  into 
the  fallacy  of  the  industrial  world,  all  the 
bookkeepers  would  report  to  a  head  book- 
keeper in  a  distant  city  and  all  the  janitors 
to  an  alleged  expert  chief  janitor  somewhere 
else.  Much  of  the  local  feeling  of  distrust 
against  the  American  Telephone  and  Tele- 
graph Company  and  its  later  subsidiary,  the 
Western  Union,  is  traceable  to  the  fact  that 
in  few  cities  is  there  a  recognized  head  of  the 
company.  The  work  is  divided  up  amongst 
specialists,  who  for  a  time,  by  increased  and 
intense  attention  to  certain  details,  are  able 
to  show  high  departmental  performance. 
Complaints  of  one  sort  or  another  may  be 
met  with  the  statement  that  some  other  de- 
partment is  responsible.  The  dissatisfaction 
of  the  public  sooner  or  later  finds  expression 
in  a  demand  for  increased  regulation  of 
rates  or  public  supervision  of  service 
through  commissions  or  otherwise.  A  corpo- 
ration as  an  artificial  person  suffers  enough 
lost  motion  from  lack  of  inherent  red  blood 
without  further  emphasizing  its  vulnerabil- 
ity by  a  conscious  or  unconscious  shifting  of 


FALLACIES  OF  ACCOUNTING  63 

responsibility  through  mistaken  notions  of 
the  proper  division  of  labor.  By  all  means 
there  must  be  some  division.  Where  the  effi- 
ciency doctors  disagree  is  mainly  as  to  the 
point  of  complete  convergence  of  activity  and 
authority. 

It  is  a  far  cry  from  the  old-time  watch- 
maker, who  wrought  every  part  himself,  to 
the  factory  operative  who  knows  one  machine 
turning  out  a  very  limited  portion  of  the 
works  of  the  finished  watch.  Were  the  mak- 
ing of  watches  the  chief  end  of  man,  the 
highly  segregated  activity  would  be  ideal. 
There  are  so  many  other  things  requisite, 
however,  to  insure  life,  liberty  and  the  pur- 
suit of  happiness,  that  true  composite  effi- 
ciency demands,  at  least,  such  rotation  of 
function  as  will  prevent  the  dwarfing  of  in- 
dividual development. 

Corporations,  like  society  in  general,  can- 
not stand  still.  They  must  and  do  advance. 
The  sins  of  ignorance  in  one  generation  find 
absolution  in  the  more  enlightened  practices 
of  the  next.  It  is  predicted  that  ere  long 
corporations  will  so  see  the  light  as  to  reduce 
accounting  to  its  proper  position.  Account- 
ing is  one  of  several  components  of  opera- 
tion, not  an  independent  function  in  itself. 


64  MODERN  ORGANIZATION 

Too  often  confusion  comes  from  calling 
the  accountant  an  auditor.  The  accountant 
should  be  a  registrar,  the  auditor  a  reviewer 
or  inspector.  Here  is  a  distinct  differentia- 
tion of  function.  Constructive  criticism  and 
review  have  a  distinct  function.  He  who  crit- 
icises or  reviews,  be  he  ever  so  honest,  must 
be  able  to  suggest  practicable  improvement, 
otherwise  his  criticism  degenerates  into 
harmful  carping.  It  follows,  therefore,  that 
the  inspector  must  be  an  expert  operator. 
Audit  is  one  of  several  components  of  a 
broader  activity,  inspection.  The  fundamen- 
tal defect  in  many  modern  corporations  is  in 
endeavoring  to  make  the  accountant  an  audi- 
tor, to  check  the  books  before  they  are  made 
up.  This  results  in  one-sided  development 
and  more  or  less  unconscious  fudging  of 
operation  to  meet  rigid  preconceived  notions 
of  accounting  requirements.  Patrons  would 
soon  leave  in  disgust  a  bank  whose  teller  had 
his  efficiency  measured  by  the  bookkeepers 
farther  back  from  the  counter.  The  teller  of 
necessity  relies  upon  the  record  of  the  book- 
keeper to  protect  the  bank  against  the  mis- 
takes or  designs  of  the  customer.  In  a  small 
bank  one  may  be  both  teller  and  bookkeeper. 
Later  on  the  work  is  divided,  not  because  the 


FALLACIES  OF  ACCOUNTING          65 

bookkeeper  is  considered  more  honest  than 
the  teller,  but  because  there  is  more  work 
than  one  man  can  do  and  there  is  a  self-sug- 
gesting division  of  labor.  The  underlying 
principle  is  that  volume  of  activity  rather 
than  importance  of  function  defines  planes 
of  cleavage  in  the  division  of  labor.  Fre- 
quently this  basic  principle  is  forgotten  and 
class  consciousness  encourages  the  belief 
that  segregated  activity  derives  its  existence 
from  highly  technical  knowledge.  Organiza- 
tion as  a  science  has  a  hard  task  to  overcome 
by  proper  checks  and  balances  this  feeling 
of  "we  are  so  different''  and  "our  work  is 
very  expert  and  peculiar." 

The  problem  mentioned  is  receiving  a 
practical  solution  in  a  variety  of  ways.  The 
primal  instinct  of  self  preservation  is 
prompting  engineers  to  learn  more  and  more 
of  accounting.  Some  of  the  large  New  York 
firms  of  efficiency  and  production  engineers 
are  developing  accountants  from  young  engi- 
neers. Whether  or  not  the  accountant  of  the 
future  is  an  engineer,  it  is  certain  that  the 
engineer  will  be  an  accountant.  Where  the 
public  accountant  leaves  off  and  the  muck- 
raker  steps  in  saying  that  something  is 
wrong,  the  efficiency  or  production  engineer 


66  MODERN   ORGANIZATION 

stands  fast  and  produces  improvement.  A 
prerequisite  to  a  knowledge  of  physical  engi- 
neering is  a  grounding  in  mathematical  con- 
ceptions far  beyond  those  necessary  to  cover 
every  phase  of  financial  accounting. 

The  accountant  begins  by  flattering  him- 
self that  because  entrusted  with  records  of 
financial  transactions,  he  is  more  honest  than 
the  common  run  of  people  who  deal  with  men 
and  things  rather  than  with  money.  By  an 
easy  process  of  extension  this  idea  is  devel- 
oped into  a  belief  that  all  the  employees  con- 
nected with  the  accounting  department  are 
perforce  of  a  superior  degree  of  integrity. 
Apart  from  the  baneful  subjective  effect  of 
so  absurd  a  fallacy  is  the  objective  resultant. 
Bobbed  of  part  of  his  working  tools,  denied 
by  inference  the  fundamental  requisite  of  in- 
tegrity, the  operating  man  sub-consciously 
acquires  an  attitude  of  defence  or  of  indiffer- 
ence. In  either  case  there  is  a  distinct  loss 
of  composite  efficiency  through  failure  of  the 
organization  to  co-ordinate  properly  all  the 
human  elements  engaged  in  the  particular 
activity.  There  results  a  condition  of  having 
a  junior  clerk  in  a  distant  office  question  ^he 
acts  of  a  highly  paid  officer  on  the  ground. 
The  presumption  should  be  in  favor  of  the 


FALLACIES  OF  ACCOUNTING  67 

latter,  but  because  efficiency  is  necessarily 
relative  and  intangible,  the  clerk  has  a  de- 
cided advantage  of  position  because  he  meas- 
ures performance  from  his  little  viewpoint 
with  a  seemingly  tangible  report  and  an  ap- 
parently effective  unit  of  comparison.  This 
undesirable  condition  is  highly  typified  in  the 
administration  of  the  United  States  Govern- 
ment where  hundreds  of  clerks  in  the  ac- 
counting bureaus  of  the  Treasury  Depart- 
ment at  Washington,  under  a  false  concep- 
tion of  revenue  protection,  unconsciously 
hamper  the  performance  of  upright  and  zeal- 
ous officers  and  employees  hundreds  or  thou- 
sands of  miles  away.  The  Bureau  of  Insular 
Affairs  in  the  War  Department  is  in  advance 
of  many  others  in  employing  in  the  Philip- 
pine Islands  numerous  traveling  auditors. 
As  a  broad  proposition,  the  inspector  should 
seek  necessary  data  of  audit  on  the  ground 
rather  than  have  such  data  seek  him  in  a  dis- 
tant office.  It  is  predicted  that  the  corpora- 
tion of  the  future,  and  government  is  the 
largest  of  all  corporations,  will  develop  for 
its  inspection  service,  including  auditing,  a 
corps  of  high-class  men,  composites  of  the 
inspecting  officer  of  the  army,  the  National 
bank  examiner,  and  the  traveling  railroad 


68  MODERN   ORGANIZATION 

auditor.  At  first,  probably,  such  corps  will 
be  a  set  of  more  or  less  permanent  specialists 
with  the  intuitive  faculties  highly  trained. 
Since  history  repeats  itself  in  organization 
as  elsewhere,  the  gradual  evolution  in  indus- 
try will  be,  as  shown  by  the  experience  of  the 
ages  in  armies  and  navies,  to  insist  upon 
periodical  rotation  between  the  staff  duties 
of  inspection  and  the  line  functions  of  per- 
formance. The  mistake  made  by  many  cor- 
poration officers  is  in  believing  that  in  all 
such  matters  the  ultimate  has  been  reached. 
Since  all  life  is  evolution,  the  wise  man  rec- 
ognizes the  fact  that  attainment  of  the  ulti- 
mate must  extinguish  existence  as  surely  as 
the  variable  of  mathematics  would  be  wiped 
out  if  its  limit  could  be  reached. 

Money  itself,  a  measure  of  value,  is  but  a 
symbol  and  a  representative,  and  never  per- 
formance itself.  Because  money  brings  po- 
sition, power,  and  influence  it  is  often  con- 
fused with  the  result  it  produces.  When  in 
a  more  primitive  state  of  society  a  few  indi- 
viduals were  exploited  at  the  expense  of  the 
many,  the  glamor  of  disproportionate  indi- 
viduality often  obscured  the  fallacy  of  con- 
sidering money  or  property  as  the  primal 
cause  of  pre-eminence.  When  such  unbal- 


FALLACIES  OF  ACCOUNTING  69 

anced  individualism  yields  to  more  rational 
collectivism,  as  reflected  through  the  modern 
corporate  organization  of  society,  money  and 
money  accounts  very  properly  lose  in  rela- 
tive value. 

The  present  social  unrest  flows  not  so  much 
from  dissatisfaction  with  the  unequal  distri- 
bution of  wealth  as  from  disappointment  at 
the  failure  of  its  possessors  to  measure  up 
to  higher  conceptions  of  stewardship.  The 
people  insist  upon  a  regulation  of  wealth, 
and  particularly  upon  a  regulation  of  its 
uses  through  public-service  corporations  and 
other  industrial  enterprises.  The  struggle 
for  adjustment  now  going  on  in  the  United 
States  is  but  a  manifestation  of  a  larger  cos- 
mic tendency  toward  equality.  The  problem 
in  the  United  States  is  intensified  by  reason 
of  the  fact  that  under  our  theory  of  govern- 
ment political  power  is  more  or  less  di-cen- 
tralized.  The  tendency  has  been  toward  more 
and  more  political  and  governmental  central- 
ization in  Washington.  All  the  while  finan- 
cial power  is  becoming  more  highly  central- 
ized in  New  York.  Much  time  will  be  needed 
for  harmonizing  these  dissimilar  conditions. 
In  Europe,  the  political  and  the  financial  cap- 
itals are  usually  identical  as  seats  of  central- 


70  MODERN  ORGANIZATION 

ized  power.  It  is  interesting  to  conjecture 
the  effect  upon  present  conditions  had  a 
strong  Federalist  party  been  in  power  dur- 
ing the  thirties,  forties  and  fifties,  a  period 
of  important  railway  and  industrial  develop- 
ment. The  States  Eights  party  then  in 
power  frowned  down  upon  the  notion  of  fed- 
eral control  of  railways  when  their  similar- 
ity to  rivers  and  canals  was  mentioned.  With 
so  many  disproportionate  conditions  it  is 
little  wonder  that  corporations  err  on  the 
side  of  unbalanced  organization.  Pioneers 
of  thought  may  point  the  way,  but  consum- 
mation of  scientific  ideals  in  organization 
becomes  fully  practicable  only  when  condi- 
tions are  so  acute  that  the  necessity  for  rem- 
edies is  self-evident,  and  the  method  of  solu- 
tion more  or  less  self-suggesting  to  the 
masses  of  those  concerned  in  the  results. 


SUPPLIES   AND   PURCHASES 


CHAPTER  VI 
SUPPLIES  AND  PURCHASES 

PURCHASING,  as  carried  on  by  most 
A  modern  corporations,  is  an  example  of 
exaggerated  specialization  of  function.  Pur- 
chasing is  merely  a  component  of  a  larger 
activity,  supply.  In  turn,  supply  is  a  part 
of  operation.  A  failure  to  appreciate  this 
component  relation  often  results  in  distorted 
and  unbalanced  administration.  A  strong 
personality  at  the  head  of  a  purchasing  de- 
partment may  unconsciously  hamper  the  ef- 
forts of  heads  of  other  departments  through 
a  failure  to  appreciate  the  proportionate 
value  of  supply  and  purchase  to  opera- 
tion. Purchasing  was  originally  segregated 
not  necessarily  because  it  was  so  different 
from  everything  else,  but  rather  on  ac- 
count of  the  volume  of  the  activity  having 
reached  a  stage  where  it  justified  the  undi- 
vided attention  of  one  person.  Such  person, 
being  only  human,  gradually  acquired  a 
habit  of  mind  of  considering  himself  as 
something  apart  from  those  less  skilled  in 
73 


74  MODERN   ORGANIZATION 

the  technique  of  bargaining.  Where  all 
heads  of  departments  are  closely  associated 
in  a  restricted  area,  as  in  that  of  a  single 
manufacturing  plant,  daily  personal  touch 
is  a  wholesome  antidote  for  this  "we  are  so 
different "  feeling.  The  trouble  begins  when 
several  plants  are  associated  under  a  single 
management  more  or  less  remote.  It  is  then 
that  the  acute  separation  of  function  is  de- 
fined by  thicker  and  thicker  department 
walls.  What  was  originally  a  mathematical 
plane  without  thickness,  becomes  first  a  wall 
and  then  a  fortification. 

Tradition  says  that  in  1861  it  was  inti- 
mated to  the  veteran,  General  Winfield 
Scott,  that  he  who  had  entered  the  City  of 
Mexico  so  successfully  in  1847,  should  have 
no  great  difficulty  in  capturing  Eichmond. 
General  Scott  replied  in  effect  that  many 
of  the  same  able  officers  who  helped  him  to 
get  into  the  City  of  Mexico  were  engaged  in 
keeping  him  out  of  the  city  of  Eichmond. 
So  it  is  in  a  large  corporation.  The  same 
people  who  in  the  days  of  small  things  are 
engaged  in  helping  the  head  to  enter  every 
possible  avenue  of  composite  efficiency,  are, 
as  the  enterprise  grows,  more  or  less  uncon- 
sciously in  rebellion  to  keep  their  sometime 


SUPPLIES  AND  PURCHASES  75 

allies  from  entering  the  citadel  of  what, 
through  segregation,  has  become  a  sacred 
cause.  It  cannot  be  repeated  too  often  that 
the  solution  of  the  problem  lies  in  the  earli- 
est practicable  convergence  of  complete 
authority  covering  the  entire  activity.  No 
exact  solution  is  possible  because  the  focal 
distance  of  the  individuals  concerned  is  too 
variable.  The  most  hopeful  sign  of  the  times 
is  the  willingness  of  the  leaders  of  industrial 
operation  to  discuss  the  subject.  Dogmatic 
generalizations,  induced  usually  from  too 
few  particulars,  are  giving  way  to  a  feeling 
of  doubt  as  to  final  conclusions.  True  sci- 
ence, and  organization  is  a  science,  ever  finds 
its  vindication  in  calm  and  dispassionate  in- 
vestigation. 

An  illuminating  example  of  centralized 
control  and  decentralized  activity  is  afforded 
by  the  purchasing  bureaus  of  the  Harriman 
Lines.  The  able  director  of  purchases,  Mr. 
W.  V.  S.  Thome,  in  New  York,  makes  blan- 
ket contracts,  when  practicable,  for  such  ma- 
terial and  supplies  as  can  be  most  economi- 
cally purchased  en  bloc  for  all  the  railways 
constituting  the  Associated  Lines.  For  ex- 
ample, locomotives,  cars,  steel  rails,  car 
wheels,  bridges,  etc.,  etc.,  will  usually  fall 


76  MODERN  ORGANIZATION 

under  this  class.  Each  of  the  constituent 
properties  has  its  own  purchasing  agent 
who,  when  acquiring  standard  articles  under 
the  blanket  contracts  mentioned,  becomes  an 
ordering  agent.  On  the  other  hand  the  pur- 
chasing agent  of  the  Union  Pacific  Eailroad 
of  Omaha  can  probably  drive  a  better  bar- 
gain locally  for  such  supplies  as  ties,  timber, 
shovels,  brooms,  etc.,  etc.  The  point  of  it 
all  is  that  the  policy  of  centralization  is  suf- 
ficiently elastic  to  permit  discriminating 
thought  by  responsible  officers.  Too  much 
centralization  always  dwarfs  the  initiative  of 
the  man  on  the  ground  by  inf erentially  deny- 
ing him  the  ability  to  discriminate.  In  brief, 
an  attempt  is  made  by  primary  organization 
to  decide  a  majority  of  the  questions  in  ad- 
vance, a  hopeless  proposition.  It  is  pre- 
dicted that  the  supply  and  purchase  admin- 
istration of  the  Harriman  Lines  will  be 
further  decentralized,  so  that  perhaps  the 
division  superintendent  can  buy  to  advantage 
certain  of  his  supplies  in  local  markets  or 
jobbing  centres.  Most  railways  and  many 
industrial  corporations  reason  fallaciously 
that  because  some  things  can  best  be  pur- 
chased from  a  centralized  office,  hence  all 
things  should  be  so  purchased.  The  Harri- 


SUPPLIES  AND  PURCHASES  77 

man  Lines'  reasoning  is  that  experience  must 
be  the  guide,  that  some  things  must  be  pur- 
chased under  one  method  and  some  under 
another.  Typical  of  the  other  view  is  the 
Santa  Fe  System  whose  officers  complain 
that  the  allotted  three-score  years  and  ten 
are  too  brief  a  span  for  the  countless  tran- 
sitions of  requisitions,  and  supply  corre- 
spondence, between  the  great  West  and  dis- 
tant Chicago. 

Could  one  man  do  all  the  buying  and  insure 
prompt  action  and  delivery,  the  segregation 
of  purchasing  would  be  ideal.  Soon,  how- 
ever, the  purchasing  agent  gathers  around 
him  a  large  office  force  entirely  unsympa- 
thetic with  the  particular  needs  of  the  users 
of  the  material  and  supplies.  The  office  be- 
comes unwieldy  and  deals  with  papers  and 
accounts  rather  than  with  men  and  things. 
The  office  employee  of  limited  experience 
may  have  a  greater  voice  in  the  management 
than  the  experienced  Dfficer  charged  with 
the  largest  outside  responsibilities.  The 
purchasing  agent  boasts  that  his  bright  as- 
sistant saved  the  company  a  dollars  by  con- 
tinued correspondence  vwith  certain  firms. 
Meantime  the  company  may  have  lost  xa  dol- 
lars because  men  were  working  to  poor  ad- 


78  MODERN   ORGANIZATION 

vantage    while    awaiting   proper   tools   and 
material. 

Bequisitions  may  be  counted  a  necessary 
evil  to  be  reduced  to  the  lowest  possible 
terms.  Ideal  supply  would  be  automatic. 
Too  often  a  requisition  tells  a  distant  office 
only  what  it  should  already  have  known.  The 
largest  single  item  of  supply  on  a  railway, 
fuel  for  locomotives,  is  furnished  without 
regular  requisition  because  the  necessities 
are  so  apparent.  A  definite  amount  of  fuel 
is  shipped  periodically  in  the  absence  of  re- 
quests for  variation  in  quantity.  As  admin- 
istration improves  and  official  ideas  broaden, 
more  commodities  will  be  included  in  the  list. 
A  start  has  been  made  by  numerous  rail- 
ways by  running  monthly  supply  cars  to  is- 
sue station  and  track  supplies  to  agents  and 
section  foremen.  Most  of  these  roads  per- 
sist in  the  foolish  practice  of  sending  worth- 
less requisitions  with  these  cars,  worthless 
because  the  responsible  officer  with  the  cars 
should  decide  on  the  ground  the  amount  to 
be  issued  in  each  case.  An  estimate  of  the 
probable  total  requirements  can  be  made 
with  sufficient  practical  accuracy  for  stock- 
ing the  cars  for  the  trip.  Apart  from  the 
wasted  energy  in  preparing  useless  papers, 


SUPPLIES  AND  PURCHASES  79 

is  the  psychological  effect  of  causing  indi- 
viduals to  give  greater  weight  to  the  requi- 
sition, a  shadow,  than  to  the  article  itself, 
the  suhstance. 

Financiers  are  learning  that  there  is  a 
practical  limit  to  the  amount  of  work  which 
can  be  effectively  performed  by  a  single 
office.  There  was  a  time  when  very  small 
railways  could  be  combined  in  a  single  work- 
ing system  with  unquestioned  advantage  in 
administration.  Long  ago  such  combination 
passed  the  peak  of  efficiency.  A  decade  ago 
the  promoters  of  the  new  Rock  Island  Rail- 
way system  acquired  the  Choctaw,  Oklahoma 
and  Gulf,  which  had  its  general  offices  at 
Little  Rock,  Arkansas.  About  the  same  time 
they  also  absorbed  the  Burlington,  Cedar 
Rapids  and  Northern,  a  distinctively  Iowa 
road  with  general  offices  at  Cedar  Rapids. 
Each  of  the  roads  mentioned,  with  some- 
thing over  a  thousand  miles  of  line,  enjoyed 
a  considerable  degree  of  local  popularity 
and,  therefore,  immunity  from  drastic  legis- 
lation. The  general  officers  of  these  roads 
had  a  distinct  identity  in  Arkansas  and  Okla- 
homa in  one  case,  and  in  Iowa  in  the  other. 
When  the  citizens  of  these  proud  States 
awoke  to  the  fact  that  the  seats  of  authority 


80  MODERN  ORGANIZATION 

had  been  removed  to  far-off  Chicago,  that 
all  purchasing  had  been  centralized  in  that 
city,  there  was  a  feeling  of  resentment  which 
necessarily  had  some  bearing  in  shaping  leg- 
islation hostile  to  corporations.  To  say  that 
ties  and  timber  cut  in  Arkansas  can  only  be 
bought  to  advantage  in  Chicago  is  as  ridicu- 
lous as  it  is  expensive.  In  sharp  contrast 
to  this  mistaken  policy  is  the  case  of  the 
prosperous  Louisville  and  Nashville  system, 
now  financially  associated  with  the  Atlantic 
Coast  Line.  It  is  an  open  secret  that  the 
Louisville  and  Nashville  controls  the  Nash- 
ville, Chattanooga  and  St.  Louis  Eailway 
and  the  Georgia  Eailroad ;  and  is  a  dominant 
factor  in  the  Atlanta  and  West  Point,  which 
includes  the  Western  Eailway  of  Alabama. 
Each  of  the  properties  mentioned,  however, 
is  a  distinct  local  entity  with  its  president 
and  full  complement  of  general  officers.  It  is 
said  that  not  even  are  the  mechanical  appli- 
ances standardized  as  among  these  different 
roads.  This  is  perhaps  too  extreme  a  con- 
dition, but  it  has  at  least  the  value  of  pre- 
venting an  undue  centralization  of  supplies 
and  purchases. 

The  general  trend  of  thought  at  present 
is  to  recognize  the  sociological  element  as 


SUPPLIES  AND  PURCHASES  81 

the  most  important  feature  of  administra- 
tion. To  offset  the  local  unpopularity  of  the 
Southern  Pacific  in  California,  some  perhaps 
deserved  but  much  undeserved,  a  president 
with  large  powers  has  recently  been  placed 
in  San  Francisco.  Simultaneously  four  other 
presidents  were  elected  for  Omaha,  Nebras- 
ka; Houston,  Texas;  Tucson,  Arizona;  and' 
Portland,  Oregon.  Chairman  Lovett  has 
wisely  placed  upon  the  shoulders  of  these 
five  presidents  the  duty  of  acquiring  that 
local  human  touch  which  becomes  more  vital 
as  civilization  advances.  Chairman  Lovett 
and  his  five  presidents  now  perform  with 
some  degree  of  comfort  the  duties  which 
killed  that  great  genius,  Edward  H.  Harri- 
man,  who  fell  a  victim  to  his  own  juggernaut 
of  centralization. 

One  of  the  temptations  to  which  mankind 
has  yielded  from  the  beginning  is  to  seek 
perpetual  motion  in  administrative,  as  well 
as  in  physical,  affairs.  The  hope  has  been 
that  by  some  hocus  pocus  of  a  constitution, 
a  scheme  of  government,  or  a  chart  of  organ- 
ization, a  self-perpetuating  entity  would  be 
set  going  to  govern  internal  affairs  for  an 
indefinite  period.  The  sociologist  sees  that 
systems  survive  only  as  they  reflect  the  prog- 


[82  MODERN   ORGANIZATION 

ress  of  a  people,  whether  that  progress  be 
in  government,  in  administration,  or  in  abil- 
ity to  become  self-reliant.  A  phase  of  this 
general  tendency  is  seen  in  the  segregation 
of  the  storekeeping  function  for  large  corpo- 
rations. "When  irregularities  develop,  when 
waste  is  discovered,  when  ignorance  of  mate- 
rials and  their  conservation  is  manifest,  the 
fallacious  remedy  usually  proposed  is  to 
place  this  peculiar  activity  under  the  control 
of  a  special  body  of  men  expert  in  that  one 
feature.  The  true  function  of  the  specialist 
and  the  expert,  let  it  be  repeated,  is  to  show 
the  layman  how  best  to  perform  tasks  of  a 
general  nature.  When  a  separate  depart- 
ment is  created  such  specialization  often  be- 
comes the  lazy  man's  excuse  for  side-step- 
ping responsibility.  The  true  solution  lies 
in  patient  instruction  of  those  who  are  re- 
miss, in  such  thorough,  broadminded  inspec- 
tion as  will  insure  maximum  hearty  effort 
for  improvement.  Because  an  artisan  is 
clumsy  or  ignorant,  his  superiors  should  not 
take  away  his  working  tools  until  they  have 
exhausted  every  known  method  of  teaching 
him  the  trade  or  art.  The  Pennsylvania 
Eailroad,  whose  organization  was  laid  out 
by  military  men  a  half-century  ago,  has 


SUPPLIES  AND  PURCHASES  83 

never  yielded  to  the  temptation  to  create  a 
separate  supply  department.  It  has,  how- 
ever, fallen  into  the  mistake  of  centralizing 
its  purchasing  to  the  extent  that  a  clerk  in 
Philadelphia  may  discount  the  judgment  of 
a  superintendent  in  Baltimore  or  Washing- 
ton. The  Harriman  Lines,  after  various  seg- 
regations of  the  supply  function,  sometimes 
under  the  accounting  department  and  some- 
times as  a  separate  branch  of  the  operating 
department,  have  recently  amalgamated  sup- 
ply under  Operation  by  placing  all  division 
storekeepers  under  the  respective  division 
superintendents  and  by  including  store  ac- 
counting in  the  division  accounting  bureaus. 
The  effect  has  been  to  make  the  superin- 
tendent and  his  various  assistants  zealous 
conservers  of  store  supplies,  where  previ- 
ously they  unconsciously  sought  to  draw  the 
greatest  amounts  possible  from  the  store 
because  it  was  in  another  department  for 
which  they  had  no  responsibility.  When  the 
bandit  really  reforms  he  is  an  able  police 
chief,  a  guardian  of  law  and  order. 

The  United  States  Navy  has  long  had  a 
bureau  of  supplies  and  accounts.  The  mem- 
bers of  the  pay  corps  were  supposed  to  be 
interchangeable  as  pay  officers  and  store- 


84!  MODERN  ORGANIZATION 

keepers.  This  is  sound  organization  and  it 
is  to  be  regretted  that  a  movement  is  on  foot 
looking  to  the  segregation  of  supplies  from 
accounts.  Both  logically  and  practically  the 
two  are  closely  interwoven.  When  the 
volume  of  business  is  small  the  same  person 
can  be  both  pay  officer  and  storekeeper. 
"When  warranted  by  volume  the  duties  can 
be  segregated  to  advantage,  not  because  of 
the  inherent  importance  of  either,  but  solely 
because  there  is  more  work  than  one  man  can 
do.  Off-setting  this  mistaken  agitation  is 
the  wholesome  legislation  proposed  for  amal- 
gamating the  pay  corps  of  the  Navy  with  the 
line.  Ultimately,  a  generation  hence,  while 
every  seagoing  line  officer  will  not  be  a  pay- 
master, every  paymaster  will  be  a  seagoing 
line  officer,  stripped  of  that  class  conscious- 
ness which  is  so  fatal  to  composite  efficiency. 
Granted  the  premise  that  in  all  organiza- 
tion such  ultimate  consummation  is  desired, 
the  conclusion  is  irresistible  that  supplies 
and  purchases  are  but  a  component  of  opera- 
tion, whether  that  operation  be  the  mainte- 
nance of  a  really  military  navy,  the  manufac- 
ture of  steel,  or  the  running  of  great  rail- 
roads. 


LINE   AND   STAFF 


CHAPTER  VII 
LINE  AND  STAFF 

TT'NOWLEDGE  is  power.  Knowledge  of 
"-  the  principles  governing  line  and  staff 
in  organization  is  often  sadly  lacking  in  the 
training  of  executive  officers.  The  sins  of 
ignorance  are  costly.  No  field  of  investiga- 
tion will  yield  a  larger  return  in  efficiency 
than  that  of  line  and  staff. 

Line  functions  are  those  exercised  in  di- 
rect sequence  through  prescribed  and  defi- 
nite channels  of  authoritative  control.  The 
first  line  officer  had  no  staff  because  he  had 
time  to  do  both  the  acting  and  the  thinking 
parts.  As  the  activity  grew  in  volume,  the 
responsible  line  head  found  the  necessity  for 
expert  advice.  Perhaps  this  came  from  a 
lawyer,  a  surgeon,  or  an  engineer.  What- 
ever the  source,  there  was  no  suggestion  of 
turning  over  to  the  expert  adviser  the  direc- 
tion of  the  activity  itself.  In  a  less  highly 
organized  condition  of  society  the  distinc- 
tion was  easily  maintained.  The  lawyer,  the 
surgeon,  or  the  engineer  might  have  many 
87 


88  MODERN   ORGANIZATION 

clients.  This  divided  patronage  rendered  it 
manifestly  impossible  for  the  outsider  to  be- 
come responsible  for  direction  of  internal 
affairs.  In  the  modern  corporation  it  fre- 
quently happens  that  the  amount  of  expert 
attention  demanded  will  justify  engaging  the 
expert  to  devote  his  sole  attention  to  the 
corporation  in  question.  Then  the  trouble 
begins.  Human  nature  is  such  that,  un- 
checked, its  ambition  leads  to  meddlesome 
interference  with  specific  matters  beyond  its 
immediate  concern.  The  problem  of  organi- 
zation is  to  impose  such  checks  and  balances 
that  each  component  of  the  activity  will 
maintain  its  proper  proportion  and  relation 
to  the  others. 

Staff  as  contra-distinguished  from  line 
originates  in  the  necessity  for  maximum  in- 
tellectual attention  untrammeled  by  the  de- 
mands of  administrative  routine.  Here  is 
a  distinct  differentiation  of  function.  The 
officer  absorbed  in  directing  large  affairs,  in 
getting  things  done,  is  of  the  line.  For  the 
time  being  at  least  he  is  too  busy  to  origi- 
nate better  methods  or  to  seek  the  principles 
underlying  his  activities.  He  is  the  operator 
rather  than  the  inventor;  the  actor  rather 
than  the  playwright.  Science  and  invention 


LINE  AND  STAFF  89 

add  to  the  complexities  of  the  art  and  force 
the  necessity  for  expert  assistance. 

The  old  sailing  masters  had  to  be  rein- 
forced by  engine  experts  when  steam  was 
applied  to  navigation.  Fortunately,  the  law 
of  the  sea  demands  undivided  control  in  the 
sailing  master,  and  the  marine  engineer  has 
always  been  subordinate  to  the  captain  of 
the  ship.  Until  recently  this  subordination 
has  been  too  intense.  The  marine  engineer 
in  a  staff  corps  was  out  of  line  for  promotion 
to  the  captaincy.  Perhaps  the  chief  engi- 
neer was  twice  as  good  a  man  as  the  first  offi- 
cer, and  perhaps  had  double  the  service,  but 
higher  than  a  chief  engineer  he  could  not  go. 
Since  the  splendid  progressive  amalgama- 
tion of  the  staff  steam  engineers  of  the 
United  States  Navy  into  the  navigating  line, 
the  specialist  in  engineering  finds  no  hatch- 
way permanently  battened  between  the  en- 
gine room  and  the  deck.  Under  the  old  order 
of  things,  there  was  before  a  strong  man  in 
the  engine  room  a  constant  temptation  to 
fortify  himself  behind  the  technique  of  his 
specialty  at  the  possible  expense  of  naviga- 
tion itself.  Now  that  he  is  a  navigating  offi- 
cer, the  direct  purpose  of  the  ship,  namely 
navigation,  is  constantly  most  prominent. 


90  MODERN   ORGANIZATION 

Engine  rooms  exist  to  propel  ships.  Ships 
do  not  exist  to  contain  engine  rooms,  except 
incidentally. 

The  recent  Titanic  disaster  has  called 
public  attention  to  the  failure  to  observe  the 
old-time  custom  of  developing  all-round 
men  at  sea.  There  were  not  enough  real  sail- 
ors to  man  the  life  boats  effectively,  and 
stewards  and  stokers  proved  poor  substi- 
tutes for  sailors.  This  can  be  traced  to  the 
failure  on  the  modern  steamship  to  balance 
line  and  staff,  to  check  over-specialization, 
and  to  remember  that  the  ship,  the  whole,  is 
greater  than  a  department,  one  of  its  parts. 
The  remedy  does  not  lie  necessarily  in  in- 
creasing the  number  of  sailors  as  such,  but 
rather  in  rotating  stokers  and  others  with 
sailing  duties  and  rendering  them  available 
and  more  effective  in  time  of  need.  This 
means  more  trouble  for  responsible  heads, 
more  work  for  officers  in  educating  and 
training  their  men.  Such  increased  work 
is  what  officers  are  for.  Such  constant  incen- 
tive to  endeavor  prevents  sluggishness  and 
inaptitude  for  emergencies. 

The  first  staff  officer  had  no  authority  be- 
yond that  of  polite  inquiry.  There  was  no 
one  whom  he  could  command.  Gradually  he 


LINE  AND  STAFF  91 

acquired  an  office  force  and  assistants.  Not 
satisfied  with  telling  others  how  to  do,  he 
•unconsciously  began  doing  things  himself. 
He  thus  became  a  line  officer  burdened  with 
administrative  routine  precluding  proper 
concentration  on  that  thinking  part  which 
the  staff  officer  was  himself  created  to  per- 
form. The  controversies  between  line  and 
staff  in  the  Army  and  Navy  of  the  United 
States  have  cost  our  Government  untold  mil- 
lions. Most  of  the  railway  and  industrial 
corporations  of  the  United  States  are  wast- 
ing some  money  every  day  by  permitting 
staff  officers  to  attempt  to  exercise  line  func- 
tions. The  Army  and  the  Navy  have  found 
an  effectual  check  by  going  back  to  first  prin- 
ciples, by  amalgamating  staff  and  line,  by 
judicially  rotating  function,  and  by  substi- 
tuting periodic  details  from  the  line  for  per- 
manent appointments  to  the  staff. 

Such  solution  is  so  logical  and  so  prac- 
tical that  it  is  attracting  the  attention  of  the 
railway  and  industrial  world.  As  the  sub- 
ject receives  the  attention  that  it  deserves, 
the  practical  application  of  the  principles 
involved  will  be  prompt  and  intelligent.  So 
one-sided  has  been  the  training  of  executive 
officers  that  most  of  the  so-called  captains  of 


92  MODERN  ORGANIZATION 

industry,  narrowed  by  specialized  training, 
must  perforce  consume  much  time  in  study- 
ing subjects  previously  outside  their  scru- 
tiny. 

Training  leaves  its  marks.  A  lawyer, 
called  to  an  executive  position,  often  fails  to 
see  the  necessity  for  the  direct  and  ever- 
present  sequence  of  authority.  If  all  the 
judges  of  a  city  leave  town  for  the  week 
end,  little  harm  may  result.  So  unusual  is  an 
application  out  of  regular  hours  for  a  writ 
of  injunction  or  a  writ  of  habeas  corpus  that 
the  inconvenience  of  securing  a  judge  would 
not  be  serious.  Industrial  concerns  and  rail- 
ways, however,  run  every  day  in  the  week 
and  every  month  in  the  year.  There  must 
ever  be  an  alert  and  present  incarnation  of 
administrative  authority.  These  administra- 
tors are  like  the  firemen  and  the  policemen 
of  a  city.  There  can  be  no  haphazard,  indefi- 
nite "take  it  up  next  week"  method  of  pro- 
cedure. 

Constitutions  of  Governments  follow  scien- 
tific differentiation  of  function.  The  execu- 
tive is  a  line  function,  continuous  in  effect 
and  direct  in  action.  The  judicial  is  a  staff 
function,  more  or  less  continuous  in  effect, 
and  presumably  operative  not  directly,  but 


LINE  AND  STAFF  93 

through  the  executive  function.  The  legisla- 
tive is  a  staff  function  intermittent  in  action 
and  indirect  in  the  application  of  its  conclu- 
sions. Frequently  there  is  a  departure  from 
these  scientific  planes  of  cleavage  and  harm 
results. 

Just  at  the  present  time  the  Federal  courts 
are  engaged  in  a  futile  effort  to  exercise  the 
line  functions  of  not  only  regulating  but  ad- 
ministering numerous  great  corporations. 
The  fundamental  defect  is  the  same  as  exists 
in  receiverships.  When  the  court  attempts 
administrative  functions,  there  is  no  tribunal 
for  judicial  review  of  its  own  acts.  As  this 
principle  is  understood,  receiverships  will  be 
supervised  by  some  executive  arm  of  the 
State,  as  is  done  in  the  case  of  banks  both 
by  the  Federal  Government  and  some  of  the 
State  banking  bureaus.  Eeceiverships  are 
seldom  denied,  for  the  reason  that  judges,  be- 
ing human,  covet  power.  Were  the  receiver- 
ship ordered  by  the  judge  to  be  conducted 
by  someone  else  than  himself,  there  would  be 
greater  probability  of  real  judicial  action  on 
his  part.  No  military  commander  of  modern 
times  has  dared  exercise  the  despotic  author- 
ity that  often  characterizes  a  court  in  con- 
ducting a  corporation  receivership. 


94  MODERN   ORGANIZATION 

The  staff  function  of  greatest  vital  neces- 
sity is  that  of  inspection  or  review.  The  ten- 
dency of  inspection  is  that  of  extremes.  In- 
spection reports  often  become  perfunctory 
and  colorless.  On  the  other  hand,  they  may 
be  hypercritical  and  demoralizing.  True  in- 
spection is  as  open  as  the  day  and  as  wel- 
come as  the  evening.  True  inspection  makes 
the  persons  inspected  grateful  for  the  inspec- 
tion. The  true  inspector  is  so  thorough  in 
his  training,  so  secure  in  his  knowledge,  so 
considerate  of  his  subjects,  so  forgetful  of 
himself,  so  devoted  to  his  duty  and  so  worthy 
of  respect,  that  those  whom  he  inspects  pay 
the  unconscious  homage  of  admiration.  Such 
men  are  rare,  but  they  can  be  developed. 
Experience  has  proven  that  there  are  definite 
limits  of  time  within  which  an  officer  can 
be  assigned  to  staff  inspection  duty.  Some 
return  to  the  line  is  essential  to  retain  that 
human  touch  with  everyday  requirements 
through  which  alone  can  the  confidence  of 
others  be  merited. 

An  important  component  of  inspection  is 
audit.  As  previously  stated,  accounting  fre- 
quently attempts  to  do  duty  as  auditing. 
This  is  another  instance  of  failure  to  differ- 
entiate between  line  and  staff.  Accounting 


LINE  AND  STAFF  95 

is  a  line  function,  a  part  of  operation.  Audit- 
ing is  a  staff  function,  a  part  of  comprehen- 
sive inspection. 

All  positions  contain  their  characteristic 
tendencies  and  inherent  temptations.  The 
line  officer,  because  he  is  practical  and  direct, 
is  often  impatient  of  staff  suggestion,  which 
he  regards  as  fantastic  and  theoretical.  Too 
often  this  prejudice  is  strengthened  by  the 
unfortunate  mental  attitude  of  the  staff  ex- 
pert. Men  who  think  out  of  and  away  from 
conventional  grooves  have  usually  a  unique 
personality.  Too  often  this  is  coupled  with 
overbearing  intolerance  for  their  less  gifted 
brethren.  With  personal  eccentricities  that 
are  but  manifestations  of  narrow  selfishness, 
the  cause  of  efficiency  has  had  to  struggle 
against  the  handicap  of  the  unfortunate  per- 
sonal equations  of  some  of  its  ablest  expo- 
nents. Tactless,  intolerant,  and  inconsiderate 
treatment  of  conscientious  line  officers  has 
discredited  many  an  honest  staff  expert.  The 
true  teacher  makes  his  students  love  their 
work  and  respect  him  because  the  work  is 
lovable  and  because  his  teachings  are  sound. 

The  best  antidote  for  the  undesirable  con- 
dition mentioned  is  periodic  service  in  the 
line.  It  rounds  off  the  square  corners  and 


96  «      MODERN   ORGANIZATION 

bevels  the  sharp  edges.  The  staff  officer  in 
turn  is  more  valuable  when  fortified  by  ac- 
tual line  experience  and  accomplished  re- 
sults. It  is  always  easier  to  tell  the  other 
fellow  how  than  to  do  the  thing  oneself.  The 
most  successful  man  is  he  who  has  done  both 
things,  who  has  told  and  has  done,  who 
knows  how  and  who  also  knows  why. 

Staff  and  line  functions  are  often  confused 
because  of  a  loose  use  of  the  overworked 
word  " staff."  It  is  entirely  possible  for  the 
same  individual  to  act  both  in  line  and  staff 
capacities.  Several  line  officers  at  the  head 
of  distinct  departments  or  groups  of  activity 
may  collectively  constitute  the  advisory  staff 
of  their  common  superior.  Each  of  the  nine 
heads  of  the  executive  departments  of  the 
United  States  Government  in  Washington  is 
a  line  officer  exercising  direct  authority  over 
hundreds  or  thousands  of  subordinates.  As- 
sembled at  the  White  House,  the  nine  become 
collectively  the  President's  Cabinet,  a  staff 
body.  The  weakness  of  this  governmental 
organization  is  the  absence  of  a  chief  of  staff, 
in  effect  an  assistant  president.  An  attempt 
is  made  to  supply  this  defect  by  having  a  sec- 
retary to  the  President  at  $7,500  a  year  di- 
rect and  co-ordinate  for  the  President  the 


LINE  AND  STAFF  97 

activities  of  nine  strong  Cabinet  officers  each 
rated  at  $12,000  a  year.  The  President  of  the 
United  States  is  too  busy  a  man  to  bring 
about  complete  co-ordination,  and  much  goes 
by  default.  In  recent  months  the  handling  of 
a  delicate  situation  in  Mexico  has  furnished 
numerous  instances  of  a  glaring  lack  of  co- 
ordination between  the  State,  Treasury,  War 
and  Navy  Departments.  This  was  the  fault 
of  a  defective  system  rather  than  of  indi- 
vidual shortcomings. 

Evolution  brings  us  back  to  first  princi- 
ples. In  the  first  administration  of  George 
Washington,  his  Secretary  of  State,  Thomas 
Jefferson,  was,  in  effect,  though  not  in 
name,  prime  minister  and  chief  of  staff. 
Foreign  affairs  were  an  incident  of  the  State 
Department.  Today  the  foreign  affairs  of  a 
mighty  nation  absorb  practically  the  entire 
activities  of  the  State  Department.  It  no 
longer  serves  as  a  balance  wheel  for  the 
other  departments.  The  remedy  is  to  create 
a  Department  of  Foreign  Affairs  under  a 
secretary,  a  member  of  the  Cabinet,  and  to 
restore  to  the  State  Department  many  of  its 
original  functions.  The  Secretary  of  State, 
in  the  same  building  with  the  President, 
would  be  the  latter 's  assistant  and  chief  of 


98  MODERN  ORGANIZATION 

staff.  The  Department  of  State  would,  as 
its  name  implies,  be  the  department  of  de- 
partments, balancing  and  co-ordinating  the 
other  nine.  One  of  its  functions  would  be 
that  of  inspection,  including  audit  and  re- 
view. It  would  include  a  comptroller  who 
would  audit  the  Treasury  Department.  The 
anomalous  condition  of  having  the  Treasury 
Department  audited  by  its  own  comptroller 
would  be  eliminated.  The  position  of  secre- 
tary to  the  President  would  join  the  scrap 
heap  of  discarded  organization. 

The  greatest  boon  to  modern  organization 
is  the  chief-of-staff  idea,  scientific  in  concep- 
tion, practical  in  application,  effective  in  re- 
sult and  as  enduring  as  eternity  itself. 


THE  GENESIS  AND  EEVELATION  OF 
OBGANIZATION 


CHAPTER  VIII 

THE    GENESIS   AND   REVELATION   OF 
ORGANIZATION 

/^RGANIZATION  is  a  necessity  and  not 
^-^  an  accident.  Organization  exists  in  re- 
sponse to  some  need  of  the  social  order.  The 
type  of  organization  adopted,  however,  is 
often  accidental  and  frequently  unscientific. 
There  are  so  many  more  men  who  know  how 
than  there  are  who  know  why,  that  depar- 
tures from  sound  principles  should  be  ex- 
pected, rather  than  otherwise. 

The  first  type  of  organization  encountered 
among  all  peoples  is  that  of  the  family,  well 
termed  the  unit  of  civilization.  This  organi- 
zation is  scientifically  sound  because  based 
upon  natural  laws.  The  evolution  of  this  or- 
ganization is  from  polygamy  to  monogamy. 
At  first,  the  family  served  all  purposes  of  or- 
ganization. As  new  generations  came,  as 
populations  increased,  the  distinct  limitations 
of  the  scope  of  the  family  organization  neces- 
sitated a  still  larger  unit,  such  as  the  tribe  or 
the  clan.  Whenever  precedents  are  lacking 
101 


102  MODERN  ORGANIZATION 

any  new  organization  is  characterized  by  rule 
by  the  strongest.  Thus  it  happens  that  des- 
potism alone  is  able  to  hold  together  the  more 
or  less  heterogeneous  elements  which  have 
been  grouped  together  to  carry  out  an  under- 
taking. 

Gradually,  as  the  component  elements 
crystallize  along  more  or  less  definite  axes  of 
activity,  there  come  demands  for  protection 
in  the  enjoyment  of  positions  attained.  In 
government  such  demands  eventually  result 
in  charters  of  liberty,  in  guarantees  of  pro- 
tection to  person  and  property,  in  constitu- 
tions written  and  unwritten,  and  in  various 
other  forms  of  checks  and  balances.  Such  or- 
ganization should  be  scientific,  since  it  is 
based  upon  the  practical  necessity  of  check- 
ing the  natural  caprice  of  those  invested  with 
authority  and  power.  Governmental  organ- 
ization, however,  is  usually  more  scientific 
than  practically  effective.  It  accomplishes 
the  general  purposes  in  a  highly  satisfactory 
manner,  but  at  an  enormous  and  extravagant 
money  cost.  The  inherent  defect  is  the  diffi- 
culty in  checking  the  public  official  effectively, 
and  at  the  same  time  leaving  him  a  bal- 
ance of  initiative  and  defined  responsibility. 
There  is  always  the  conscious  or  sub-con- 


EVOLUTION  OF  ORGANIZATION        103 

scions  fear  that  the  public  official  will  become 
too  powerful. 

Government  thus  differs  from  other  corpo- 
rations in  having  its  stock-holders,  the  citi- 
zens, holding  back  the  duly  constituted  offi- 
cers. In  most  other  corporations  the  propo- 
sition is  reversed.  The  stockholder  is  so  fear- 
ful that  the  duly  elected  officers  of  the  cor- 
poration will  not  produce  maximum  financial 
returns  that  he  usually  leaves  such  officers 
untrammeled  and,  perhaps,  unchecked. 

Here  are  two  extremes  between  which  must 
be  fixed  a  more  or  less  indefinable  happy  me- 
dium. That  such  medium  is  being  scientifi- 
cally sought  is  evidenced,  on  the  one  hand, 
by  the  growth  of  commission  forms  of  gov- 
ernment, and,  on  the  other,  by  the  increasing 
interest  of  stockholders  and  directors  of 
large  corporations  in  the  performance  of 
their  officers.  The  student  of  organization  as 
a  science  finds  much  cause  for  optimism  in 
contemporaneous  developments. 

The  casualist  finds  a  world  of  chance  in 
which  accident  and  luck  play  the  leading 
parts.  The  scientist,  in  whatever  branch,  in- 
cluding organization,  finds  a  world  of  uni- 
versal law  with  every  recognized  cause  pro- 
ducing a  corresponding  effect.  There  is  no 


104  MODERN   ORGANIZATION 

greater  evidence  of  the  advancement  of  man- 
kind than  its  willingness  to  discuss  subjects 
of  every  nature.  Previous  failures  to  con- 
sider organization  as  a  science  may  be  traced 
to  the  same  fundamental  misconception  of 
individual  rights  and  moral  delicacy  as  has 
characterized  consideration  of  the  science  of 
eugenics.  Time  is  the  best  regulator  of  all 
great  questions,  because  it  permits  the  oper- 
ation of  the  fundamental  of  all  laws,  that 
of  supply  and  demand.  Organization  and  eu- 
genics are  supplying  a  demand  of  a  rapidly 
advancing  world  for  a  better  grouping  of 
better  men  and  women. 

Mankind  is  prone  to  mistake  the  shadow 
for  the  substance.  Just  at  present  the  effi- 
ciency of  the  modern  corporations  is  meas- 
uredly  decreased  by  the  snap  judgment  of 
the  financial  centers  upon  too  short  periods 
of  performance.  This  condition  is  reflected 
in  weekly  or  monthly  statements  of  gross 
earnings  and  of  net  earnings.  Efficiency  is 
judged  by  seeming  ability  to  make  a  better 
showing  than  was  made  in  a  corresponding 
previous  period.  The  result  is  that  subordi- 
nate officers  are  tempted  to  strive  for  a  paper 
showing  rather  than  to  conduct  and  conserve 
along  the  broadest  lines  the  property  en- 


EVOLUTION  OF  ORGANIZATION        105 

trusted  to  their  charge.  For  example,  the 
man  in  the  street  in  New  York  may  judge  the 
efficiency  of  a  western  railway  by  the  size  of 
its  trainload  in  a  given  month  or  year.  Per- 
haps the  apparently  wonderful  showing  has 
been  attained  by  excessive  strain  upon  the 
motive  power,  shortening  its  life  and  reduc- 
ing its  ultimate  earning  capacity.  Again,  so 
insistent  is  the  demand  for  satisfactory  bal- 
ances, periodically  struck,  that  high  corpo- 
rate officers  find  it  necessary  arbitrarily  to 
reduce  working  forces  regardless  of  actual 
conditions.  Vehement  and.  imploring  tele- 
grams go  from  New  York  to  outlying  dis- 
tricts demanding  reduction  of  expenses.  The 
local  official  disbands  some  of  his  working 
forces,  lets  assembled  material  lie  idle,  know- 
ing all  the  time  that  the  ultimate  cost  will  be 
greater  because  of  the  loss  of  efficiency  in  re- 
organizing his  forces  and  resuming  the  work. 
Apart  from  the  economic  loss  involved  is 
the  sociological  unrest  engendered  by  treat- 
ing men  as  pawns  on  a  financial  checker- 
board. The  offsetting  argument  of  the  mod- 
ern banker  is  that  even  though  it  cost  more 
money  later  on,  it  is  better  to  wait  until 
money  is  more  plentiful.  The  observing  citi- 
zen is  quick  to  detect  the  fallacy  of  this  rea- 


106  MODERN  ORGANIZATION 

soning  and  quicker  to  condemn  a  financial 
system  that  demands  such  departure  from 
real  efficiency.  A  refreshing  exception  to  this 
general  practice  is  shown  by  the  Chicago  & 
Northwestern  Eailway  which,  under  the  old- 
fashioned  administration  of  Marvin  Hughitt, 
has  actually  insisted  upon  increasing  its 
equipment  in  dull  times  because  labor  and 
material  are  then  cheaper. 

Men  are  the  product  of  their  environment, 
and  the  coming  captain  of  industry  is  the 
man  whose  conception  of  trusteeship  will  be 
that  of  a  scientific  buffer  between  the  finan- 
cial power  on  the  one  hand  and  the  practical 
necessity  of  the  property  and  its  employees 
on  the  other.  The  labor  unions  have  been 
quick  to  see  the  weakness  and  blindness  of 
capital.  The  tyrannical  hold  of  labor  today 
is  due  more  to  unscientific  methods  of  capi- 
tal, to  absent  treatment  by  large  interests 
from  New  York,  than  to  the  cupidity  of  labor 
itself.  A  concrete  case  is  that  unscientific 
unit  of  performance,  the  train  mile,  which 
leads  to  many  unsound  conclusions  and  ex- 
pensive outlays  in  railway  operation.  So  de- 
pendable is  human  nature,  so  sound  is  pub- 
lic opinion  in  the  long  run,  so  honest  and  so 
able  is  the  corporation  officer  of  today,  that 


EVOLUTION  OF  ORGANIZATION  107 

the  solution  of  these  great  questions  will 
come  through  scientific  study  of  the  funda- 
mental principles  involved.  Evolution  will 
thus  preclude  the  necessity  for  and  prevent 
revolution. 

It  sometimes  happens  that  human  nature 
must  be  hurried  to  its  conclusions.  The 
greatest  present  need  is  an  antidote  for  the 
unwillingness  of  men  to  profit  by  the  pre- 
vious experience  of  others.  It  would  be 
amusing,  were  it  not  so  expensive,  to  watch 
the  gropings  of  many  corporate  officers  for 
methods  to  test  efficiency.  Ignorant  of  funda- 
mental principles,  intolerant  of  outside  sug- 
gestion, unable  to  detect  the  analogy  in  other 
undertakings,  they  repeat  the  expensive  ex- 
periments of  the  past.  Nearly  every  large 
corporation  today  is  endeavoring  to  inaugu- 
rate some  effective  system  of  inspection  or 
review.  Nearly  every  one  is  falling  short,  be- 
cause an  attempt  is  made  to  have  the  cheap 
man  check  the  work  of  the  high-priced  man. 
Nearly  every  one  is  disappointing  its  pro- 
moters, because  of  failure  to  differentiate  be- 
tween accounting,  an  operating  or  line  func- 
tion, and  auditing,  an  inspection  or  staff 
function. 

It  often  happens  that  what  unfolds  itself 


108  MODERN  ORGANIZATION 

as  a  discovery  to  one  is  but  a  matter  of  prin- 
ciple long  previously  enunciated  by  someone 
else.  Among  the  ideas  that  are  contempo- 
raneously revealing  themselves  to  searchers 
after  truth  is  the  principle  that  most  modern 
undertakings  are  too  large  to  be  concen- 
trated in  one  man,  however  able  or  zealous, 
because  it  is  absolutely  essential  that  author- 
ity shall  converge  in  some  one  individual. 
The  false  idea  has  gained  sway  that  such  a 
man  alone  could  act  in  numerous  cases.  The 
application  of  this  idea  necessitates  minimiz- 
ing the  cases  in  which  the  head  must  himself 
act.  By  a  process  of  evolution,  the  chief-of- 
staff  idea  has  unfolded  itself  to  relieve  such 
head  and,  at  the  same  time,  provide  compre- 
hensive action  for  a  greater  number  of  cases. 
Another  concept  that  has  forced  its  atten- 
tion is  that  effective  means  must  be  provided 
for  a  comprehensive  review  of  performance. 
The  railway  president  cannot  be  left  indefi- 
nitely to  report  upon  his  own  performance. 
Granted  this  necessity,  a  fallacious  attempt 
has  been  made  to  check  the  president  through 
inanimate  accounts,  through  reports  pre- 
scribed by  the  Interstate  Commerce  Commis- 
sion or  other  public  bodies.  It  is  now  dawn- 
ing upon  those  who  are  concerned  how 


EVOLUTION  OF  ORGANIZATION        109 

inadequate  is  such  a  test.  A  more  satisfac- 
tory remedy  is  the  outside  expert,  the  disin- 
terested reviewer,  who  is  qualified  by  train- 
ing and  experience  to  report  upon  men  and 
things  as  well  as  upon  papers  and  accounts ; 
a  man  who  can  draw  his  conclusions  from 
first-hand  information  on  the  ground  rather 
than  from  second-hand  data  in  the  office. 

Perhaps  the  greatest  revelation  of  modern 
organization  is  the  consciousness,  tardy 
though  its  arrival,  that  there  is  a  distinct  lim- 
itation to  the  size  of  undertakings,  that  vol- 
ume may  be  the  determining  condition.  The 
operating  activities  of  many  corporations 
have  outgrown  a  detailed  direction  from  a 
central  source.  The  self-suggesting  remedy 
is  a  decentralization  of  detailed  activity  and 
a  retention  of  centralized  control.  In  many 
cases  such  efforts  at  decentralization  are  still 
very  crude.  It  is  hard  to  teach  old  dogs  new 
tricks.  Here  again  time  and  intelligent  ef- 
fort will  supply  the  adjustment  which  the 
conditions  demand. 

Modern  organization  reveals  to  the  stu- 
dent a  far  more  pleasing  picture  than  that 
beheld  by  the  prophet  of  old.  The  religion 
of  Fear,  with  its  bottomless  pit  and  lake  of 
brimstone,  has  been  replaced  by  a  religion  of 


110  MODERN  ORGANIZATION 

Love  with  its  heights  of  hope  and  its  valleys 
of  peace.  Modern  requirements  have  brought 
men  together  in  large  masses.  They  have 
organized  together  for  one  purpose  or  an- 
other. Political  and  economic  efficiency  have 
long  been  their  cherished  desires.  As  weak- 
nesses developed  in  this  organization  they 
have  sought  improvement.  Sometimes  the 
attempt  was  wise,  sometimes  foolish,  often 
ineffectual,  but  nearly  always  sincere.  When- 
ever the  effort  ran  counter  to  the  general 
welfare  or  to  the  normal  advancement  of 
mankind,  the  organization  quickly  showed 
the  defect.  Out  of  it  all,  as  modern  organi- 
zation sweeps  into  the  newer  day  of  compo- 
site efficiency,  comes  the  delightful  realiza- 
tion that  its  beacon  light  is  scientific  and  en- 
lightened altruism. 

THE  END 


Efficiency 

BY  HARRINGTON  EMERSON. 

ME.  EMERSON'S  much  quoted  and  largely 
discussed  book  "Efficiency"  is  not  merely 
a  development  of  a  theory;  it  is  system  of 
principles  as  applied  and  the  results  attained  in 
practice. 

How  to  effect  economies,  how  to  increase  the  ef- 
ficiency of  labor  and  machinery,  how  to  attain  the 
maximum  of  output  from  a  given  equipment  and 
force — these  are  the  subjects  he  writes  about.  And 
the  methods  he  describes  are  being  used  in  some  of 
the  most  successful  manufacturing  institutions  in 
the  United  States.  They  have  proved  their  worth 
by  savings  amounting  in  the  aggregate  to  millions 
of  dollars  annually. 

Mr.  Emerson  has  said  that  the  railways  of  the 
United  States  could  save  $1,000,000.00  a  day  if  they 
would  adopt  scientific  principles  of  management.  A 
picturesque  phrase,  but  not  an  exaggeration.  He 
shows  how  companies,  not  transporting,  but  manu- 
facturing, have  saved  money,  and  even  saved  their 
existence,  by  adopting  systems  of  internal  economy 
such  as  he  describes. 


12mo.    266  pages.     Cloth  binding.     $2.00,  prepaid. 


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The  Twelve  Principles 
of  Efficiency 

BY  HARRINGTON  EMERSON. 

THIS  second  volume  by  Mr.  Emerson  is  a  re- 
duction of  the  doctrine  of  efficiency  to  prac- 
tice. He  discovers  twelve  principles  of  ef- 
ficiency which  are  so  definite,  so  constant,  so  true, 
that  they  may  be  used  as  gauges.  Any  industry,  any 
establishment,  any  operation,  may  be  tested  by  these 
twelve  principles  and  its  inefficiency  located  and 
measured.  It  is  a  book  vrhich  recognizes  the  need 
of  the  hour  and  proposes  a  plan  to  meet  it. 

Emerson  writes  of  things  as  they  are,  as  they  ought 
to  be,  and  as  they  can  be  made. 

This  book  is  one  that  cannot  fail  to  carry  sug- 
gestion and  benefit  to  every  man  upon  whom  rests 
the  burden  of  the  greater  success  of  any  industrial 
enterprise.  A  man  with  a  real  message,  he  forces 
home  each  important  truth  with  firmness  and  a 
strong  personality. 

The  keynote  is  higher  reward  for  the  employer, 
for  the  corporation,  for  the  nation. 


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Work,  Wages, 
and  Profits 

BY  H.  L.  GANTT. 

ME.  GANTT  says  that  men  specially  suited  to 
any  particular  kind  of  labor,  if  supplied 
with  proper  implements  and  intelligently 
directed,  will  do  on  the  average  at  least  three  times 
as  much  as  the  average  workman  does;  and  if  the 
limiting  factor  is  physical  exertion,  the  average  work- 
man will  do  this  increased  task  day  after  day,  if  as- 
sured sufficient  compensation. 

The  ratio  of  what  can  be  done  to  what  is  done  is 
even  greater  than  three  to  one  in  work  requiring  skill 
and  planning.  The  problem  of  attaining  this  condi- 
tion is  discussed  from  practical  experience  in  this 
book.  The  rewards  held  out  are: 

An  increase  of  output. 

A  decrease  in  cost  of  product. 

Better  workmen  attracted  by  higher  wages. 

Improved  quality  of  product  due  to  better  work- 
men. 


12mo.    200  pages.     Cloth  Unding.    $2.00.,  prepaid. 


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3 


Industrial  Plants 

BY  CHARLES  DAY. 

CAEEFUL  study  of  the  layout  and  construction 
of  industrial  buildings  is  an  early  step  toward 
efficiency  and  economy  in  manufacturing. 
This  book  embodies  Mr.  Day's  wide  experience  as 
consulting  engineer  in  the  construction  of  some  of 
the  most  successful  shops  and  factories  in  the  country. 

The  author,  in  fact,  publishes  in  full  the  manner 
in  which  his  own  expert  organization  proceeds  to  de- 
termine the  most  economical  layout,  plan,  and  con* 
struction  for  a  new  plant,  or  the  rearrangement  of 
an  existing  one. 

The  best  plant  will  fail  under  inefficient  manage- 
ment ;  but  the  plant  that  is  arranged  after  considera- 
tion of  all  the  factors  covering  the  product  will  prove 
to  be  an  important  feature  in  economical  manage- 
ment. 

The  book  is  unusually  replete  with  suggestion.  It 
tells  how  the  plant  should  be  laid  out  so  that  good 
management  can  make  the  most  of  it. 


12mo.     294:  pages.     Cloth  binding.     $3.00. 


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Maximum 
Production 


BY  C.  E.  KNOEPPEL. 

A  BO  OK  directed  to  the  systematic  management 
of  foundries  and  machine  shops  for   the  im- 
provement of  their  productiveness  and  finance. 
It  is  written  by  a  practical  man  who  has  abundant 
experience  in   foundry  work — "brought  up   on  the 
floor" — and  it  is  intended  for  practical  foundry  men 
and  business  men. 

Every  point  having  any  bearing  upon  the  subject 
in  hand  is  taken  up  and  considered  in  one  of  the  six- 
teen chapters.  The  machine  shop  and  foundry  are 
considered  as  twin  factors  in  production,  so  closely 
related  throughout  so  large  a  range  of  metal  manu- 
facturing that  their  problems  can  best  be  studied  to- 
gether. Therefore,  after  laying  down  the  principles 
of  organization  and  management  common  to  ef- 
ficiency operation  and  maximum  success  in  both,  the 
author  follows  special  applications  of  the  same  ideas 
in  the  shop,  and  then  in  the  foundry. 


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Cost  Methods 
for  Executives 

BY  BENJ.  A.  FRANKLIN. 

ME.  FEANKLIN  concerns  himself  only  with, 
those  facts  and  figures  that  are  essential  to 
give  the  executive  officer  complete  control 
of  a  manufacturing  business.  He  does  not  go  into 
the  detail  of  forms.,  cards,  and  petty  records  belong- 
ing to  the  routine  of  the  cost  clerk.  He  does  illus- 
trate and  discuss  forms  of  periodical  reports  which 
keep  the  superintendent  and  manager  constantly  in- 
formed of  finished  and  raw  stock  on  hand,  use  and 
waste  of  materials,  profit  or  loss  on  each  line  of 
product,  the  cost  of  the  salable  article,  and  fluctua- 
tions in  expense  burden.  He  shows  how  such  reports 
may  be  obtained  without  going  into  wearisome  detail. 
The  articles  as  they  appeared  serially  have  awak- 
ened active  interest,  and  many  manufacturers  have 
put  the  ideas  into  practical  use  as  soon  as  they  were 
published.  The  reissue  in  book  form  is  in  response 
to  a  general  demand. 


(In  preparation^ 


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6 


Distribution  of 
Expense  Burden 

BY  A.  HAMILTON  CHURCH. 


THERE  is  no  more  important  problem  always 
before  the  executive  than  that  of  correct  and 
proper  distribution  of  the  expense  burden. 

Mr.  Church  hits  hard  at  percentage-guessing  in 
cost  accounting.  His  plan  is  to  separate  at  the  out- 
set all  the  important  factors  of  production,  e.g., 
buildings,  power,  stores,  transport,  etc.,  and  reduce 
them  to  unit  charges.  It  is  evident  that  the  infor- 
mation gained  by  the  installation  of  the  system  he 
proposes  would  more  than  repay  all  of  the  expense 
involved  in  its  application,  and  when  once  in  full 
swing  the  details  would  require  but  very  little  time. 

The  demonstration  is  concrete  enough  to  enable 
the  cost  accountant  to  apply  it  to  his  own  case,  and 
yet  not  lacking  in  the  broad  statement  of  principle 
that  adapts  it  to  all  cases. 


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Production 
Factors 

BY  A.  HAMILTON  CHURCH. 

ME.  CHUECH  has  specialized  in  the  subject 
of  factory  accounting,  and  the  analysis  he 
presents  of  the  conditions  affecting  cost 
finding  entitles  his  book  to  the  highest  position  in 
the  literature  of  the  subject. 

It  is  practical  from  beginning  to  end,  is  concise 
and  precise,  and  should  be  closely  studied  by  all  who 
are  in  positions  of  responsibility. 

The  accurate  distribution  of  general  expense  is  ad- 
mittedly one  of  the  most  perplexing,  but  yet  one  of 
the  most  important,  problems  with  which  the  manu- 
facturer must  deal.  The  simple  but  thorough  anal- 
ysis conducted  in  this  volume,  and  the  clear,  com- 
mon-sense demonstration  presented,  will  furnish  a 
reliable  guide  to  the  solution  of  highly  complex  con- 
ditions in  factory  accounting. 

Mr.  Church's  method  of  handling  the  question  is 
thorough,  sound,  sensible,  and  scientific;  and  while 
it  is  addressed  particularly  to  the  machine  shop,  it  is 
applicable  to  any  manufacturing  plant. 


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8 


Profit-Making 
Management 

BY  CHARLES  U.  CARPENTER. 


THE  author  is  a  successful  manager  of  wide  ex- 
perience, and  clearly  defines  the  benefits  ac- 
cruing from  perfected  organization,  and  how 
it  may  be  attained. 

He  begins  with  the  reorganization  of  a  run-down 
concern,  and  discusses  all  the  modern  methods  of  re- 
ducing costs. 

The  work  takes  up  the  defects  in  the  various  de- 
partments and  explains  the  methods  of  overcoming 
difficulties  of  this  character. 

The  keynote  is  to  obtain  the  best  efficiency,  from 
every  unit  in  the  works,  whether  that  unit  be  human 
or  a  machine  built  of  iron  and  steel. 

The  book  is  suggestive  as  to  what  should  be  done 
and  what  should  be  avoided,  what  troubles  may  arise, 
and  how  they  may  be  avoided. 


Octavo.    Cloth  binding.     $2.00,  prepaid. 


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The  Factory 
Manager 

BY  HORACE  L.  ARNOLD. 


THIS  book  is  designed  to  give  such  an  exhibi- 
tion of  widely  differing  systems  of  cost- 
keeping  now  in  satisfactory  use  as  will  af- 
ford any  manager,  although  not  himself  an  account- 
ant, the  knowledge  needful  to  an  intelligent  compari- 
son between  his  own  methods  and  cost-keeping  meth- 
ods in  general. 

The  book  presents  first,  different  original  cost- 
keeping  systems,  varying  in  complexity  from  one  so 
simple  that  the  entire  history  of  each  production 
order  is  recorded  on  a  single  printed  form,  up  to 
some  of  the  elaborate  methods  by  which  any  desired 
degree  of  minuteness  in  subdivision  of  accounting 
can  be  obtained. 

In  brief,  it  is  intended  that  this  book  shall  furnish 
to  the  factory  manager  a  full  exhibit  of  the  latest 
and  most  advanced  methods  and  appliances  used  in 
shop  cost-keeping. 


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10 


The  Cost-Keeper 

BY  HORACE  L.  ARNOLD. 

THIS  book  is  made  up  of  several  complete  sys- 
tems of  factory-accounting  forms,  both  the 
costing  and  the  commercial  blanks  being  ac- 
curately reproduced  in  arrangement,  and  each  one 
having  the  actual  size  given,  together  with  its  color 
and  the  material  on  which  it  is  printed.  The  func- 
tion and  the  exact  manner  of  using  each  form  are 
also  carefully  and  fully  detailed,  so  that  the  reader 
can  easily  comprehend  its  scope  and  employment, 
and  make  an  intelligent  estimate  of  its  probable 
value  if  applied  to  his  own  uses. 

The  manager  who  is  not  perfectly  satisfied  with 
his  system,  and  who  is  aware  that  his  accounting 
costs  more  than  it  should,  and  fails  to  give  informa- 
tion in  such  complete  detail  as  to  point  clearly  the 
way  to  highly  desirable  savings,  will  find  in  this 
book  information  and  examples  of  great  value,  show- 
ing the  exact  means  by  which  others  have  reached 
the  ends  he  himself  wishes  to  attain. 


Octavo.    432  pages.    Cloth  binding.    $5.00. 


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11 


Patents  in 
Manufacturing 

BY  EDWIN  J.  PRINDLE. 

TELLS  you  the  things  you  ought  to  know  for 
your  guidance  and  safety  in  the  early  stages 
of  your  work,  before  it  seems  really  worth 
while  to  consult  a  patent  lawyer.     It  tells  just  the 
things  you  want  to  know  about  perfecting  and  pat- 
enting an  invention,  in  just  the  way  you  want  to 
have  them  told.    It  gives  more  practical  information, 
in  more  compact  and  useful  form,  than  any  other 
book  on  the  subject  ever  written. 

It  tells  what  sort  of  thing  is  patentable,  how  the 
preliminary  work  should  be  done,  and  how  the  claims 
should  be  drawn.  It  tells  you  what  protection  a 
patent  gives  you,  and  how  to  obtain  the  most  and 
best  protection  possible.  It  tells  you  what  infringe- 
ments are,  how  to  avoid  them  and  how  contests  be- 
tween rival  claimants  to  a  patent  are  decided.  It 
tells  you  what  your  rights  are  as  between  employer 
and  employee,  and  how  an  assignment  of  a  patent 
from  one  person  to  another  may  be  safely  made.  It 
tells  you  how  to  patent  a  new  invention  to  get  the 
most  profit  from  it. 

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Scientific  Manage- 
ment and  Railroads 

BY  Louis  D.  BRANDEIS. 

WHAT  is  scientific  management  and  how  does 
it  differ  from  ordinary  competent  manage- 
ment? What  are  the  examples  and  results 
of  scientific  management  applied  to  manufacturing 
plants  and  to  railways,  which  were  brought  out  at 
the  rate  hearings  in  Washington  and  startled  the 
business  world  into  a  more  active  and  responsive  in- 
terest than  was  ever  fixed  upon  any  industrial  ques- 
tion? 

What  was  the  basis  of  the  assertion  quoted  by 
every  publication  in  the  United  States  that  the  rail- 
roads are  wasting  $1,000,000.00  a  day? 

What  direct  testimony  was  offered  by  some  of  the 
best  known  and  responsible  American  manufacturers 
as  to  the  actual  gains  in  their  own  business  attained 
through  the  introduction  of  methods  of  scientific 
management  ? 

All  the  pertinent  testimony  on  these  points  is  con- 
centrated in  the  portion  of  Mr.  Brandeis'  brief  here 
reprinted. 

Octavo.    106  pages.    Cloth  linding.    $1.00. 


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13 


The  Engineering  Index 

A  COMPLETE   SUBJECT   INDEX  TO   THE   ENTIRE  INDUS- 
TRIAL AND  ENGINEERING  PRESS  SINCE  1884. 

A  GUIDE  to  the  published  literature  of  all  engi- 
neering information — telling  exactly  where  any 
given  data  may  be  found. 

It  embraces  all  branches  of  engineering,  and 
clearly  indexes  alphabetically  by  subjects  all  impor- 
tant articles  of  permanent  value  which  have  appeared 
since  January  1,  1884,  in  all  the  standard  technical, 
weekly,  monthly  and  quarterly  journals,  transactions 
and  proceedings. 

Consult  it  whenever  occasion  arises  to  investigate" 
any  subject — and  such  occasions  arise  almost  daily  in 
engineering  practice. 

Consult  it  when  you  are  investigating  a  certain 
subject  and  desire  to  find  all  published  information 
pertaining  to  that  subject. 

Consult  it  when  you  are  looking  for  a  definite  item 
or  article  and  have  a  fairly  clear  idea  of  its  subject 
and  scope. 

VOLUME  I,  1884  to  1891  inclusive. . .  .OUT  OF  PRINT 
VOLUME  II,  1892  to  1895  inclusive. .  .OUT  OF  PRINT 
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